03 Sep National Survey: M&A Advisors and Brokers Say 2018 is the Best Year to Sell a Business in Last Five Years
Optimism in the M&A market is at an all time high according to findings from the Q2 2018 Market Pulse Report published by the International Business Brokers Association (IBBA), M&A Source and the Pepperdine Private Capital Market Project. 21% of business advisors surveyed say 2018 is the best year they’ve ever seen for business owners to sell their businesses. Another 37% say it’s the best time in five years, and 17% say it’s the best in the last 10 years.
Consistent with general market optimism advisors believe seller advantage is growing, with year-over- year seller-market sentiment increases in all market sectors. In the Main Street market, for businesses valued at less than $500,000, seller market sentiment is at the highest it’s been since the survey started in 2013.
“The current environment means there may never be a better time to sell your business” said Craig Everett, PhD, Assistant Professor of Finance and Director of the Pepperdine Private Capital Markets Project at the Pepperdine Graziadio Business School. “Capital is readily available from lenders, private equity firms, and family offices, and existing companies have record cash sitting on the sidelines. Interest rates are still relatively low, the economy is going strong with an estimated 4.3 percent GDP growth in Q2 2018, and business confidence remains high. Well-run companies are doing well in the M&A market right now.”
“For many sellers, this is the time to take some chips off the table and head for the exit. Savvy business owners are taking advantage of the strong seller’s market, even though they aren’t ready to retire,” said Mike Camerota, JD, M&AMI, CM&AP, Founder of Touchstone Advisors, M&A Source Chair. “The idea is to maximize value by selling now, diversify their net worth, and then buy or start another business where they see opportunity.”
Advisors are split on how the low unemployment rate is impacting business transitions. In the Main Street market, 28 percent of advisors believe talent shortages are hurting the ability to close deals while 16 percent say it’s helping. Numbers look slightly different in the lower middle market, with 18 percent saying it hurts deal-making and 19 percent saying it helps.
“Organic growth is a challenge right now because businesses of every size are struggling to find qualified talent. Low unemployment can be a particular challenge for small and mid-sized businesses trying to compete,” said Bob Dale of Austin Dale Group. “When it’s hard to find talent, it’s hard to grow organically, leading owners to grow through acquisition of existing businesses with staff who know their customers. But the talent dynamics can be a bit different in Main Street where turnover is often higher,” Dale continued. “Buyers may be hesitant to take on an understaffed business or one that comes with a lot of hiring challenges.”
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 2018 survey was completed by 277 business brokers and M&A advisors.
About 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 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
Anchored in the core values of integrity and innovation, the Pepperdine Graziadio Business School challenges individuals to think boldly and drive meaningful change that positively impacts their organizations and communities. With an entrepreneurial spirit, the Graziadio School advances experiential learning in small classes that deepen connections and stimulate critical thinking. Through our wide continuum of MBA, MS and executive degree programs offered across six California campuses, Graziadio faculty inspire full-time students and working professionals to realize their greatest potential as values-centered, Best for the World Leaders. Follow Pepperdine Graziadio on Facebook, Twitter, Instagram and LinkedIn.