Business Sales Shifting to a Seller’s Market Q3 2015
The 2015 3rd Quarter IBBA and M&A Source Market Pulse Survey is out with some interesting findings. “This quarter’s report continues to see the pendulum shift to a seller’s market across all deal sizes. While buyers still hold the upper percentage for transactions valued at $1 million or less, the percentage is shrinking.”
Below are a few highlights from the report:
- Companies with strong earnings and good accounting and management records are wanted.
- Buyers are increasingly market educated and therefore know about more opportunities that are coming to market. They remain patient, but ready to act when a strong company is on the market.
- Retirement remained the leading reason that business owners went to market, which is understandable since baby boomers continue to retire in increasing numbers.
The casual reader of this information might assume there was a stronger shift to a buyer’s market as the quantity shifts; however, the findings indicate that the market is slowly becoming a sellers’ market especially as transactions increase in size.
- Business owners who are selling now are ‘ahead of the curve’ and are getting rewarded with very strong valuations. Eventually, as more and more baby boomers seek to retire and put their business on the market, there will be an oversupply of sellers and the market will most likely swing back to a ‘buyer’s market.
- The majority of small business buyers (under $1 million deal size) made the acquisition to ‘buy a job’. Typically, these buyers are already employed and are looking for a compelling reason to leave that security and run a business of their own. The buyers of larger businesses, on the other hand, are making synergistic purchases to add depth to their existing business.
- An increasing number of existing business owners are expanding through acquisition and want to thoroughly compare the potential acquisition against their current company. Since these buyers want to understand the ability to integrate the company into their own, they expect timely and accurate information to make these decisions.
Click here to download the full report summary.