Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.
Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.
Performance cookies are used to understand and analyse the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Advertisement cookies are used to provide visitors with customised advertisements based on the pages you visited previously and to analyse the effectiveness of the ad campaigns.
By Reizchel Oasay and Ron Buck
The International Business Brokers Association (IBBA) and M&A Source have recently published their second-quarter market research for 2022. The report is a statistical analysis of 355 respondents who answered this quarter’s 25-question survey. This is the first of a three-part series.
The respondents were asked if they believed it was a buyer’s or seller’s market for different price ranges. The following business ranges are believed to be a buyer’s market: 63% for businesses valued under $500K and 56% for businesses valued in the $500K to $1M range. And the following business ranges were believed to be a seller’s market: 56% for businesses in the $1M to $2M range, 71% for businesses in the $2M to $5M range, and 74% for businesses in the $5M to $50M range.
The median number of months from listing or engagement to close was 6.5 months for under $500K and 7 months for $500K to $1M range. For the $1M to $2M range, $2M to $5M range, and $5M to $50M range, the median number of months was 8 months.
Seller’s Discretionary Earnings (SDE) and Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) median multiples had some movement from last quarter’s multiples. SDE stayed at 2.0x for the under $500K transactions, and EBITDA decreased from 2.1x to 2.0x. In the $500K to $1M range, SDE decreased from 2.8x to 2.5x, and EBITDA decreased from 2.9x to 2.0x. In the $1M to $2M range, the SDE increased from 2.8x to 3.3x, but EBITDA decreased from 4.0x to 3.4x. In the $2M to $5M range, the SDE multiple increased from 3.0x to 3.5x, but EBITDA decreased from 4.4x to 3.3x. And lastly, in the $5M to $50M range, the SDE multiple increased from 3.3x to 4.1x, and EBITDA decreased from 6.0x to 5.3x. Buyers and sellers should be careful when using generic multiples, as multiples are not only just one of several valuation methodologies but also vary greatly by industry.