01 Oct The IBBA and M&A Source Market Pulse Highlights Dramatically Changing Market Conditions
Recently, the International Business Brokers Association (IBBA) released its Q2 survey report, The IBBA and M&A Source Market Pulse. This report marks the 36th edition of this comprehensive quarterly report. The IBBA and M&A Source Market Pulse was created to help buyers, sellers, business brokers and M&A advisors understand the current market conditions.
In particular, the report aims to provide a detailed overview of market conditions for businesses being sold in Main Street (values of $0 to $2MM) as well as middle market values ($2MM to $50MM). This Q2 survey features feedback from an impressive 301 brokerage professionals across 44 states with 266 transactions taking place in the quarter. The report had numerous key findings that are important for brokerage professionals to note.
One key fact of interest is that a full 25% of businesses are still operating below capacity due to the pandemic’s enduring impact. The Market Pulse survey concluded that a quarter of all small and medium sized businesses are either in a position where they are temporarily closed or are operating below capacity. On the other side of the equation, the survey noted that 29% of businesses have either emerged as “covid proof” or have actually benefitted from the pandemic.
For sellers with covid resistant or covid proof businesses, now could be an excellent time to sell. For buyers, there are potential deals to be had, especially for those who are willing to look beyond the current pandemic fueled environment and towards a post-covid future.
The report also noted that burnout is a major factor impacting deal activity. Retirement continues to be the leading reason why businesses are selling, but burnout has become a quickly rising secondary reason.
The top five reasons that sellers are putting their business on the market are: retirement (35%), burnout (27%), health (15%), tax increases (7%) and general covid fatigue (7%). The pandemic is still likely playing a role in many of minds of many businessowners who are looking to sell, which means that buyers could find good deals due to pandemic. You may want to point out to your buyers that as pandemic conditions improve, many of the current good deals could vanish.
Lisa Riley, Principal of Delta Business Advisors noted, “Those ‘covid proof’ business owners who pushed ahead with exit plans, despite the pandemic, are faring well.” This fact underscores that for sellers who have weathered the “covid storm,” now is a good time for them to consider selling.