By Brandon Mack
The International Business Brokers Association (IBBA) and M&A Source have recently published their fourth quarter market research for 2019. The report is a statistical analysis of 300 respondents who answered this quarter’s 25 question survey. This is the final of a three-part series where I will examine the IBBA’s and M&A Source’s analysis of the market.
For businesses sold for under $500K, the most common industries in this range were restaurants at 24%, personal services at 18%, and consumer goods at 13%. 82% of deals in this range had no formal exit planning.
In the $500K to $1M range, the largest industries in this range were consumer goods at 25%, business services at 25%, personal services at 12%, restaurants at 12%, and construction at 12%. Only 13% had formal exit planning (meet with a broker) prior to engagement.
The most deals per industry in the $1M to $2M range are as follows: personal services at 18%, business services at 13%, construction at 8%, consumer goods at 8%, and information technology at 8%. Surprisingly in this range, still 71% of sellers had no exit planning.
In the $2M to $5M range, 29% of the businesses sold in this range were in manufacturing, 24% were in wholesale, 14% were in consumer goods, and 10% were in construction. 50% of sellers had no exit planning.
In the $5M to $50M range, 24% of the business sold in this range were in the manufacturing industry, 14% were in business services, 14% were in health care, 10% were in construction, 10% were in wholesale, and 10% were in energy. Exit planning was more common in this range, as 28% met with a broker before engagement.
In terms of seller financing, looking back at all of 2019, in the under $500K range, 12% of the price consisted of seller financing. In the $500K to $1M range, 13% was, in the $1M to $2M range 11% was, in the $2M to $5M range, 11% was, and in the $5M to $50M range, 7% was seller financing.
In all ranges, there was an increase in exit planning in Q4 of 2019 in comparison to Q3 of 2019.