Articles

By Brandon Mack

The International Business Brokers Association (IBBA) and M&A Source recently published their third quarter market research for 2016. The report is a statistical analysis of 278 respondents.  In this second of a three part series, I will examine the IBBA and M&A Source’s analysis of the buyer types, reasons for buying, and reasons for selling.

In comparison, the second and third quarters are similar when it comes to buyer types.  For businesses under $500k, the numbers are identical.  Businesses between $500k and $1M have shifted from 61% to 78% individual buyers, and businesses between $1M and $2M have also shifted from 55% to 81% individual buyers.

Major changes for the reason a seller would go to market include:  inQ3 the percentage of retirements have increased from 39% to 61% in the $500k to $1M sector.  Retirement has increased as a reason across the board.

In the 3rd quarter, there have been more buyers within a 100 mile range for businesses sold under $500k:  84% to 88.5%.  For businesses sold for over $500k in Q3, less local sales occurred.  Businesses sold between $500k and $1M more than 100 miles away have increased in sales from 24% to 29%. Those between $1M and $2M have increased from 20% to 42%.

The buyers in Q3 bought their business for the purpose of buying their job.  Individuals buying their job have increased from 51% in Q2 to 55% in Q3 for businesses under $500k.  For businesses between $500k and $1M, this number has increased from 34% to 41%, and for $1M to $2M this percent has increased from 22% to 39%.  In the $1M to $2M range, the number of add-on purchasers has decreased from 42% to 20%.