The following information has been summarized from a October 2012 IBBA market research report
Is it a buyer’s or seller’s market right now?
Brokers working Main Street deals are more inclined to describe conditions as a “buyer’s market” (>70%), while those in the lower middle market were slightly more likely to describe the market as neutral or favorable to sellers.
How much time is it taking to close?
Smaller Main Street businesses closed the fastest, with 77% of deals reportedly closing in less than seven months. As deal size increased, so did time to close. In the lower middle market, 84% of deals in the $2MM-$5MM range closed in 11 months or less. Most deals (85%) of $5MM and above reportedly sold in six to nine months, although 8% took two or more years to close.
Hot industries varied by business size. In the Main Street market for businesses valued at $1MM or less, consumer goods/retail, business services, personal services, and restaurants topped the number of closed transactions. For businesses valued between $1MM-$2MM, manufacturing (47%), health care and biotech (18%), and construction/engineering (12%) were trending.
In the lower middle market, in the $2MM-$5MM sector, wholesale distribution (29%), business services (21%), and construction/engineering (21%) accounted for most of the businesses sold. Businesses of $5MM or more followed the same trend with manufacturing at 23% and wholesale distribution at 15%.