By Brandon Mack
The M&A Source and the International Business Brokers Association (IBBA) recently published the results of their first quarter 2016 Market Pulse Report based on 370 survey respondents. Part 1 we examined three questions: Is it a buyer’s or seller’s market, how long does it take to sell a business, and valuation metrics (click here). Part 2 focused on the reasons why a business is sold and who the buyers usually are (click here). In this final part of this series, we will analyze which kinds of businesses are sold.
First, we will focus on small, usually individually owned businesses that sold for less than $500 thousand. In this classification of businesses, 26% are restaurants, 17% are personal services, and 12% are business services. Also, 10% of this group is retail.
The next bracket of businesses are still mostly owned by individuals, but sold between $500 thousand and $1 million. In this group of businesses, 18% are retail establishments, 16% are personal services companies, and 10% are businesses services companies. This group is much more commercial with 11% manufacturing, 11% wholesale and distribution, and 10% construction.
The final group we will be analyzing, are businesses purchased by a strategic buyer for between $1 and $2 million. This group has a large number of commercial businesses with 19% being construction and 14% being manufacturing. 11% of this group are retail, 11% are personal services, and 8% are business services.
Overall, as the businesses become larger more of them are commercially oriented and the buyers shift from individuals to strategic buyers or financial buyers that are expanding geographically or vertically. Please contact us if you would like to discuss the market for your business.