Still Largely a Buyer’s Market

This is still a very good time to buy a business for smaller buyers as there are relatively few purchasers committing capital to investments. In the middle market segment, sellers have more of the chips.

IBBA Survey Reveals Main Street Market is Shifting to Seller’s Market

“Confidence is up across the board, and we’re seeing that reflected in both buyers and sellers markets,” said Mark Wood, CBI, President, VMW Business Brokers, Alexandria, VA and member of the IBBA. “While this is a welcome development, we remain cautious about short-term trends in a volatile recovering economy. 

"59 percent of brokers characterized the Main Street businesses under $500,000 as a buyer’s market, while larger companies – those valued at $1 million and above – were characterized as being in a seller’s market. The majority of advisors are still pointing to a buyer’s market in the Main Street sector, but the strength of that sentiment has weakened considerably over a year ago. A year ago, 77 percent of advisors indicated the smallest deals (under $500,000) faced a buyer’s market, but today only 59 percent feel that way-a record low since the survey began.

"Buyers looking at buying a company in the Main Street market can still maintain an advantage when buying a smaller firm, but the market continues to shift toward a seller’s market,” added Mark Wood. “Buyers are losing their leverage as time passes and business size increases. If you’re doing a $1 million to $2 million deal, you’re moving into a neutral market.

"Business services led the Main Street market, appearing in the number one (or tied for first) spot for the most businesses sold in each sector. Consumer goods and personal services also held leading positions.

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