By Brandon Mack
The International Business Brokers Association (IBBA) and M&A Source just published their first quarter market research for 2017. The report is a statistical analysis of 315 respondents who answered a 25-question survey. In a three-part series, I will examine the IBBA and M&A Source’s analysis of the market; this is the third part of the series. In this part, I will break up the report based on business size. Also, I will be comparing the numbers this year to 2016’s Q1.
The largest industry for businesses sold under $500K is personal service businesses capturing 25% of the market, an increase of 8% in one year. Restaurants make up 22% of the responses, decreasing by 4% from last year. The third largest industry under $500K is business services making up 17% of the market, an increase of 5% from Q1 of 2017.
In the $500K to $1M range, the market is much more diverse with six different types of industries falling between 10% and 16% of the total market. These industries are, from largest to smallest, construction, manufacturing, business services, restaurants, personal services, and consumer goods. There have been some major changes from the responses this year compared to last year. For example, there were zero wholesale and distribution sales this quarter, while last year it made up 11% of the market. Consumer goods and retail dropped from 18% last year, to 10% this year. Restaurants in this range grew from 5% to 12% and construction grew from 10% to 16%.
In the $1M to $2M range, there are many different types of businesses that make up this market. Personal and business services make up the two largest groups respectively at 18% for personal and 15% for business services. Both groups have increased by exactly 7% from last year most likely indicating a more permanent market change. Interestingly, restaurants made up zero percent of this quarter’s report, while in Q1 of last year they made up 8%. While construction grew in the $500K to $1M range, construction fell from 19% to 12% in the $1M to $2M range.
Finally, in the $2M to $5M range, while lower in total number of companies sold, most fall in to three categories that make up 18% of the market each. These three groups are business services, construction, and manufacturing. A notable change from last year is that manufacturing dropped from 52% of the market to 18%. Similarly, to the $1M to $2M range, restaurants in the $2M to $5M range made up zero percent of the market, while last year they made up 5%.