Business Sales Survey Q1 2017

Taking Care of Employees is Owners Top Priority After Price When Selling Their Business

(Philadelphia, Pennsylvania) May 20, 2017 – Concern for their employees topped the list of priorities, after price, for business owners looking to sell their business, according to the quarterly Market Pulse Report published by the International Business Brokers Association(IBBA), M&Business Sales SurveyA Source, and the Pepperdine Private Capital Market Project.  70% of business owners ranked employees as a top concern.  Other key factors they considered when talking with buyers were timing of their exit (58%) and maintaining the legacy of the business(58%).

Other highlights of the Report:

  • Strategic Buyers(Competitors, Industry Participants) account for a minority of buyers at all transaction value levels at 33% of all buyers.
  • Time to Close from LOI date to Close Date:
    • $2-$5 million transaction value – 67% take two to three months with 30% over three months.
    • $5-$50 million – these take longer with only 36% completed in the two to three month time frame, with 59% taking more than three months.  Larger deals have more complexity in due diligence, financing and deal structure.
  • Buyers often not local:
    • Transaction values between $2 and $5 million, 59% of buyers came from more than 50 miles away.  For $5-$50 million the results were similar at 62%.
    • Private Equity groups purchases in the $2-$5 million sector increased from only 5% of buyers in 2016 to 24% in Q1 2017.  We attribute this to PEG’s looking to deploy capital and pursuing growth roll -up strategies with smaller companies.
  • Average Sellers cash at close was about 80% for transactions from $2 to $50 million.

 

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 $2-$50MM). The Q1 2017 survey was completed April 1-17, by 315 business brokers and M&A advisors representing 37 states.

(Obtain The Full Report)

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  

 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

 About the Pepperdine Graziadio School of Business and Management

A leader in cultivating entrepreneurialism and digital innovation, Pepperdine Graziadio School of Business and Management focuses on the real-world application of MBA-level business concepts. The Graziadio School provides a student-focused, globally oriented education through part-time, full-time, and executive MBA programs at five Southern California locations and at Silicon Valley and Santa Barbara campuses, as well as through online and hybrid formats. In addition, the Graziadio School offers a variety of master of science programs, a bachelor of science in management degree-completion program, and the Presidents and Key Executives MBA, as well as executive education certificate programs.