IN THIS ISSUE: Letter From the 2020 Chair A Pandemic Recession? How Virtual Data Rooms Enhance Communication Between Deal Participants The Impact of a PPP Loan on Recasting Differences Between Business Ownership and A Job New CBIs in 2020! LETTER FROM THE CHAIR: We Found a Way Barry J. Berkowitz, PhD, CBI, M&AMI Year […]
IBBA Q3 2020 Market Pulse Report
National Report: Advisors Divided on When Business Sales Will Return to “Normal” – NOW or 2021 or 2022
November 9, 2020 – LOS ANGELES – The latest data from the Market Pulse survey of business brokers and M&A advisors suggests that pandemic-resistant businesses are in demand. Responding advisors report they completed 301 transactions in the third quarter, a 71% increase over Q2 2020 and a 43% increase year-over-year.
According to the Q3 2020 Market Pulse Report published by the International Business Brokers Association (IBBA), M&A Source, Advisors are divided on when they think the Main Street and Lower M&A market will return to pre-pandemic conditions. Nearly a third (29%) think that the market will return to normal in Q2 2021. And yet, 1 in 5 believe that it won’t until 2022 or later. One-tenth (11%) of advisors are having great success in this market and believe conditions have already recovered.
“We know that unemployment is driving some buyers to market,” said Scott Bushkie, president of Cornerstone Business Services. “Some experienced, highly qualified professionals lost their jobs in the pandemic, and those people are looking to take more control over their own destiny. Buying a small business provides control and autonomy you just can’t get in the job market.”
Data also suggests that many businesses may be generating a higher return than they did one year ago. Median sale prices (as a percentage of the asking price or internal benchmark) are up year-over-year in all but one sector. Meanwhile, multiples remain strong, although down slightly over Q3 2019.
Interest in pandemic-proof businesses is extremely high. In the lower middle market, construction/engineering, business services, and manufacturing topped transaction trends. Interestingly, restaurants are still selling – 20% of businesses sold for less than $500k.
“Whether a business has remained relatively unaffected through the pandemic or whether they’ve been able to bounce back quickly from the shutdowns we had this spring – either way, they’ve shown themselves to be remarkably resilient to hard times,” said Barry Berkowitz, Principal, Berkowitz Acquisitions.. “Buyers are eager to get a look at those opportunities.”
About the Market Pulse Report
The Market Pulse Report compares conditions for businesses being sold on Main Street (values of $0-$2MM) to those being sold on the Lower Middle Market (values of $2MM-$50MM). The Q1 2020 survey was conducted April 1-15, 2020 and was completed by 416 business brokers and M&A advisors. Respondents completed 296 transactions this quarter.
About International Business Brokers Association (IBBA) and the M&A Source
Founded in 1983, IBBA is the largest non-profit association specifically formed to meet the needs of people and firms engaged in various aspects of business brokerage and mergers and acquisitions. The IBBA is a trade association of business brokers providing education, conferences, professional designations and networking opportunities. For more information about IBBA, visit the website at www.ibba.org or follow the IBBA on Facebook, Twitter and LinkedIn.
Founded in 1991, the M&A Source promotes professional development of merger and acquisition professionals so that they may better serve their clients’ needs and maximize public awareness of professional intermediary services available for middle market merger and acquisition transactions. For more information about the M&A Source visit www.masource.org or follow the M&A Source on Facebook, LinkedIn and Twitter.
Kate Stretar, Director of Operations
Laura Wright, Director of Operations
Lisa Riley, PhD, CBI, CM&AP
IBBA Market Pulse Chair / Board Member
Principal – Delta Business Advisors
Independence, OH – October 2, 2020 – The International Business Brokers Association (IBBA), the world’s largest not for profit association for the business brokerage industry, is pleased to announce the formation of its first domestic Chapter, IBBA Mid-America, with a primary service region of Missouri, Arkansas, Kansas, Kentucky, Oklahoma and Iowa. Going forward, IBBA members […]
Independence, OH – September 25, 2020 – The International Business Brokers Association (IBBA) is pleased to announce the three individuals elected by membership to serve on its board of governors for the January 1, 2021 through December 31, 2023 term: The Board also unanimously approved current board member, Randy Bring, CBI, CM&AP of Transworld […]