20 Feb Is It Currently a Buyers’ Market or Sellers’ Market?
Whether they’re looking to buy or sell a business, everyone who enters the market is looking for a good deal in their transaction. After all, as the owner, you’ve spent years of your life designing, building, nurturing and cultivating this entity. Respectively, as the buyer you’re looking to purchase a business that is going to be able to fund your lifestyle and fulfill your goals. Therefore when you decide to approach the decision to buy or sell, there is one major question to ask: Is the market currently favorable to buyers or to sellers?
To get a clear picture of the current market conditions, Pepperdine Private Capital Markets Project (in conjunction with the International Business Brokers Association and M&A Source) analyzed data from its 2018 Q3 Market Pulse survey completed by business intermediaries, M&A advisors, and other business transaction professionals based on their recent deal experiences . Here’s what they found:
In the $5MM- $50MM deal range, 80% of those surveyed felt as though it was a seller’s market and 20% said it was a buyer’s market in the last three months.
In the $2MM- $5MM deal range, 77% of those surveyed felt as though it was a seller’s market and 23% said it was a buyer’s market in the last three months.
In the $1MM- $2MM deal range, 66% of those surveyed felt as though it was a seller’s market and 34% said it was a buyer’s market in the last three months.
In the $500K- $1MM deal range, 55% of those surveyed felt as though it was a seller’s market and 45% said it was a buyer’s market in the last three months.
Finally, for deals less than $500K, 35% of those surveyed felt as though it was a seller’s market and 65% said it was a buyer’s market in the last three months.
At a glance, the reactions to the market may appear to be widely varied. When broken down into deal size ranges, it becomes apparent that there is a direct relationship between the size of a deal and whether or not the market is seen as a buyer or seller’s market.
Recent tax reforms, favorable interest rates, consumer confidence and the baby boomer generation entering the market have all contributed to the current conditions. Businesses that are available on the market are notably more stable than ever before.
To gain insight on these and other current market conditions, contact Tony Calvacca of The NYBB Group. The NYBB Group can be a resource to help business owners determine the marketability and approximate value of their business.
If you would like to discuss this article or schedule a private and complementary consultation, please contact Tony at tony@nybbinc.com or 631-390-9650.
