Business Brokerage/M&A Market Pulse 1Q20 – Part 1 of 3Buying a business For Buyers For Sellers Selling a business Valuation
Posted by Ron Buck on
By Brandon Mack
The International Business Brokers Association (IBBA) and M&A Source have recently published their first-quarter market research for 2021. The report is a statistical analysis of 301 respondents who answered this quarter’s 25 question survey. This is the first of a three-part series.
Respondents are still seeing the effects of the pandemic on their client’s businesses. 89% of respondents answered that at least one of their clients received PPP in 2020; 62% answered that at least one of their clients received PPP in 2021. Only 25% of respondents answered that they had clients that remained temporarily closed (3%) or were operating at partial capacity (22%); the other 75% are at full capacity, unaffected, or have benefited.
For businesses sold for under $500K, the median number of months from listing to close was eight and a half months. For businesses sold between $500K and $1M, the median was eight months. From $1M to $2M the median from listing to close was nine and a half months, and from $2M to $5M the median was thirteen months. In the $5M to $50M range, it was ten months.
Seller’s Discretionary Earnings (SDE) and Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) median multiples are not far off from last quarter’s multiples. In the under $500K range, the SDE median multiple paid stayed at 2x. In the $500K to $1M range, the SDE multiple stayed at 2.8x. In the $1M to $2M range, the SDE multiple stayed the same at 3.0x. The EBITDA multiple paid in the $2M to $5M range decreased to 4.0x. In the $5M to $50M range, the EBITDA multiple stayed the same at 5.0x.