Across the spectrum of sizes and price ranges of businesses, sellers now have an advantage or are at least in a better position to sell their business, according to IBBA and M&A Source Market Pulse Survey for Q2 . Created in 2012, the IBBA and M&A Source Market Pulse Survey was created to provide business owners and their advisors with a clear understanding of ever-changing market conditions.
Why has the market has shifted towards being a seller’s market? Private equity groups are now looking for ways to grow their money. Acquiring an existing business has become an increasingly attractive option to buyers due to the current labor pool conditions.
“The current M&A market is incredibly active, with North American deal volume hitting near-record peaks. Buyers, constrained by a relatively low number of sellers who went to market during the COVID-19 pandemic, continue to search for expansion and growth opportunities. It’s a seller-friendly market and that confidence shows in this quarter’s Market Pulse Survey. Seller-market sentiment is back to levels reported before the pandemic,” according to the report.
Buyers are now looking at existing companies as a way to bypass attracting talent. Instead, they can secure that talent via acquiring a new business. In short, many buyers are looking to buy versus organically build to meet their talent needs.
Another reason that now is a good time for sellers is that many buyers are looking to leave corporate America. This situation has likely been accelerated by the pandemic and people seeking to control their own destiny. The increase in global uncertainty has made the idea of becoming a business owner increasingly attractive. Experienced business brokers can help owners evaluate their businesses, determine an asking price and develop a marketing plan.
“Recognizing the strong momentum in the market, most brokers and M&A advisors are reporting optimism for the rest of 2021. There was a much more positive outlook for rising deal activity for the quarter ahead. Likewise, advisors also expect lifts in valuation,” the report said.
Through this survey, it is possible to gain clarity on businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM). Scott Bushkie served as the originator of the Market Pulse Report with IBBA and M&A Source and has continued to play a key role since the report’s inception.
The shift in climate from 2020 to 2021 underscores the value of the IBBA and M&A Source Market Pulse Survey. Through this revealing survey, it is possible for business owners and their advisors to gain a clearer understanding of market conditions and what to expect.