By John Acosta
We witnessed a surge in M&A activity in Tampa last year, as our area significantly outpaced the rest of the nation in terms of post-pandemic deal volume. According to some reports, Tampa area businesses accounted for more than $1 billion in deal activity in 2023, marking a strong showing against the previous year’s record M&A activity.
This mirrors a continued surge in statewide population growth more broadly, with hundreds of thousands of individuals and businesses relocating to the Sunshine State. For business owners, Tampa is particularly appealing due to our climate, talented workforce, tax advantages, and lower costs of doing business. The Florida Chamber of Commerce noted that by 2030, Florida will add 4 million more residents and will need to create 2 million new jobs.
As our city continues to experience outsized growth in key industries like technology, finance, health care, construction and hospitality, many Tampa-area entrepreneurs are looking to engage in deals that will benefit their businesses and give them access to new customers and markets. A commercial banking team is in a unique position to support such deals by providing the insight, financing and relationships to make the deal a success.
Art of the (Small Business) Deal
For small- and mid-sized businesses, M&A may look a little different than the megadeals that dominate headlines, but the same basic principles still apply: meaningful growth can be attained—and value added—by teaming up with an entity whose business complements one’s own, whether it be a direct competitor, intermediary or other type of service provider.
Small- and mid-sized businesses often have unique needs when it comes to dealmaking. A smaller average deal size, for one, usually precludes such businesses from participating in the same capital-raising ecosystem that underpins Wall Street IPOs and megadeals. Financing for these deals usually comes in different forms and sizes, and from different sources.
Also, smaller enterprises tend to be more local and specialized. The due diligence process must be more customized as a result, requiring on-the-ground knowledge in a specific niche of the regional business landscape.
In many cases, a commercial banker with on-the-ground expertise and specialized knowledge of various industries and transaction types can help get the process started.
At Synovus our commercial team works actively with clients across a range of transaction types—from startups to expansions and acquisitions—representing both buyers and sellers. In addition, we have built-in sub-specialties to reflect trends unique to the Tampa marketplace. Our medical and dental specialty, for example, assists health care service providers with the purchase or sale of their practices. This is an extremely active area in Tampa right now, as consolidation in the health care and life sciences industries continues at a robust pace, driven by demographics that favor an aging population and greater influx of retirees.
To Buy or To Sell?
Perhaps the most familiar transaction involves the acquisition of—or sale to—a competitor to gain market share, access new customer bases and realize competitive advantages. There are numerous reasons for a small/mid-size business owner to consider a sale or acquisition:
- Business Growth – Florida represents an extremely dense marketplace with population centers spread out across the state. Many businesses begin their operations in one locality and seek to expand to others as they grow. Starting from scratch in another area can be a challenge, which is why many choose to acquire their way into new markets—in and beyond Florida.
- Economies of Scale – It often makes good economic sense for businesses with complementary products or services to team up, so that those items can be provided with greater efficiency and at a lower cost. With interest rate costs still relatively high and economic uncertainties still lingering, combining with another entity can offer synergies that help both businesses succeed.
- Exit Strategy & Succession Planning – For business owners, the sale of a business is likely one of the most significant liquidity events of their lives. Whether exiting through sale or intergenerational transfer, business succession has profound implications that can shape a person’s quality of life during retirement. At Synovus, our experienced succession team takes a holistic, relationship-driven approach to succession planning that begins well before the handover occurs. Our multidisciplinary team examines all facets of an exit strategy, considering both business and personal assets.
Business owners in a wide range of circumstances can benefit from making a strategic sale or acquisition, but many do not know where to turn when it comes to planning and executing such a transaction. An experienced commercial banking team with deep market knowledge and an integrated service offering can assist.
John Acosta is Tampa Bay Market President at Synovus Bank