What experts are saying about deals and investments this year – Orange County Register

An informal panel of experts predict business deals will pick up in 2024 as interest rates decline and lending terms improve. (iStockphoto via Getty Images)

I am a huge networker and have been since the commercial real estate market tumbled in late 2008.

As I scanned the scorched earth of what little remained of a vibrant business, I wondered if our commercial real estate activity would ever return.

Buyers weren’t transacting, sellers couldn’t sell and lenders refused to lend. The financial world was in free fall as values lost nearly 40%, seemingly overnight. Brokers, reliant upon deals, were forced to wait, which is something very few of us were good at doing.

So as 2009 dawned, I found myself with little to occupy my time. As another week ended with no revenue, my wife would ask how my “volunteer job” was going.

On a whim, I attended a business forum at Cal State Fullerton, which yielded an introduction to a printer. Said printer in turn invited me to a networking event the following week.

Scanning the room for leads, I found no one in need of buying or selling commercial real estate. However, I discovered several professionals who had clients in need of my services. It was an indirect approach to sourcing business that opened doors for the next two decades through strategic referrals.

You see, certain advisers drink from the same trough as commercial real estate professionals. CPAs, wealth advisers, business bankers, commercial insurance agents, attorneys and those engaged in business sales all represent business owners in need of buying, selling or leasing the locations from which they operate.

The cool thing is we don’t compete with one another, we complement.

I’ve now settled in as a member of a group that informally meets once a month to share knowledge and industry happenings. What follows are insights from several group members and what they anticipate for 2024.

Business banking: Cost of capital through deposits is more expensive. Thanks to several regional bank failures last year — Silicon Valley, Signature and First Republic — greater scrutiny by regulators is being placed on loans and reserves. Consequently, now is not a great time to borrow money.

Mergers and acquisitions: 2023 found very few companies trading hands. Rising interest rates and uncertainty among business owners caused a deep sales freeze. Our investment banker is confident 2024 will be better as expectations have normalized and interest rates have declined.

Accounting and tax: Any business considering a sale over the next five years should start getting their proverbial house in order.

Law: Our group has an attorney specializing in estate planning and one who assists companies that are merging or acquiring. Estate tax laws change significantly in 2025. Act now as all are affected by the lifetime exemption, which sunsets next year.

Echoed was the sentiment that 2024 should deliver more business sales.

Information technology: Artificial intelligence and its impact on businesses is top of mind. Some companies are still morphing into all manner of virtual work, which keeps IT vendors scrambling.

Human resources: The employment environment has found some equilibrium. More talent is seeking new positions and businesses are finding it easier to hire. Compliance with new regulations enacted by our legislature last year requires constant monitoring.

Insurance: Any company that spends six figures annually in worker’s comp premiums should consider creating a captive insurance company. Simply, you self-insure along with others in your trade. Equity is built vs. throwing money into coverage not used.

Wealth: Folks can make money with idle cash. This is great news for savers but tough for businesses reliant on borrowing for growth. With treasury, money market and certificate of deposit yields north of 5% last year, a decent return could be made with very little risk. As interest rates decline this year, other return instruments will have to be sourced.

You can see why I enjoy this group! I get insight into so many other areas than commercial real estate — information my clients deal with every day.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.