National Survey: Booming Construction Industry Leads M&A Activity
Construction and engineering companies led M&A activity according to the Q2 2019 Market Pulse Report published by the International Business Brokers Association (IBBA), M&A Source and the Pepperdine Private Capital Market Project.
This is a notable change from the manufacturing industry which previously had a prominent share of market activity. “The spotlight is on construction and engineering businesses this quarter, nearly knocking manufacturing—the previous leader—off the board,” said John Howe, M&AMI, director at Business Transition Strategies. “Part of that’s due to manufacturing clients holding back right now. They’re adjusting their businesses to new trade realities before they sell.”
The Q2 2019 Market Pulse Report also found that sellers have the advantage in all market sectors $1 million and above, with 66% or more advisors pointing to a seller’s market. Confidence is dropping across every sector and seller market sentiment in the $500,000-$1 million sector dropped below 51% for the first time since Q3 2017.
“Private equity is extremely active in the lower middle market, and that’s pushing values upward,” said Craig Everett, PhD, director of the Pepperdine Private Capital Markets Project at the Pepperdine Graziadio Business School. “Industry reports suggest private equity has nearly $2.5 trillion in unspent cash right now. The booming construction industry is an area of focus – many firms are using M&A to fill their lack of manpower and others are selling while the market is hot.”
Approximately one-third of business brokers surveyed report that recent trade policy changes with China, Canada, and Mexico are causing small business owners to hold off on selling their business or lower their asking price. In Q2 2019 final sale prices came in between 85% to 100% of the pre-set asking price or internal benchmark.
About the Market Pulse Report
The Market Pulse Report compares conditions for businesses being sold on Main Street (values of $0-$2MM) to those being sold in the Lower Middle Market (values of $2MM-$50MM). The Q2 2019 survey was conducted July 1-19, 2019 and was completed by 288 business brokers and M&A advisors.
About the International Business Brokers Association (IBBA) and the M&A Source
Founded in 1983, IBBA is the largest non-profit association specifically formed to meet the needs of people and firms engaged in various aspects of business brokerage and mergers and acquisitions. The IBBA is a trade association of business brokers providing education, conferences, professional designations, and networking opportunities. For more information about IBBA, visit the website at www.ibba.org or follow the IBBA on Facebook, Twitter, and LinkedIn.
Founded in 1991, the M&A Source promotes the professional development of merger and acquisition professionals so that they may better serve their clients’ needs and maximize public awareness of professional intermediary services available for middle-market merger and acquisition transactions. For more information about the M&A Source visit www.masource.org, or follow the M&A Source on Facebook, LinkedIn, and Twitter.
About Pepperdine University Graziadio Business School
For more than 50 years, the Pepperdine Graziadio Business School has challenged individuals to think boldly and drive meaningful change within their industries and communities. Dedicated to developing Best for the World Leaders, the Graziadio School offers a comprehensive range of MBA, MS, executive, and doctoral degree programs grounded in integrity, innovation, and entrepreneurship. The Graziadio School advances experiential learning through small classes with distinguished faculty that stimulate critical thinking and meaningful connection, inspiring students and working professionals to realize their greatest potential as values-centered leaders. Follow Pepperdine Graziadio on Facebook, Twitter, Instagram, and LinkedIn.
Pepperdine Graziadio Business School
Associate Director of Marketing