Business Brokerage Market and Current Trends
We are hard at work preparing our 2012 Business Data Card: our summary of the Maine business sales market over the past 12 months. This card acts as a market snap shot, condensing a variety of data points into chart form to give professionals and business owners a better sense of market sales trends. We automatically send these out to all of our professional contacts (lawyers, accountants, financial professionals)—if you’d like to be on our mailing list just drop us an email.
While the Data Card is useful in looking at the market’s historical performance we are often asked about future trends. We use several leading indicators for both buyer activity and seller activity: anecdotal info from other professionals, buyer inquiries, registered buyer profiles, business listing activity and near term listing activity (businesses that will come on the market within the next 6 months). In general, seller activity drives the market, since business listings are inherently the “supply side” of the business brokerage market. The imbalance between buyers (demand) and sellers (supply) determines market conditions, but other factors may be equally as determinative: access to financing, buyer mobility, quality/type of supply, consumer confidence and the labor market.
So what are these factors telling us? Business sales activity is trending up. Business owners who delayed the sale of their business over the last few years are looking at the market again. Professionals are telling us that deal flow, and activity in general, has increased dramatically. Qualified buyers are aggressively pursing opportunities and banks are reaching out looking for lending opportunities.
What are buyers looking for? Manufacturers, distributors, e-commerce and niche businesses with 3 year cash flow averages (EBITDA) of at least $150,000. These businesses sell quickly and available opportunities are limited. For these types of businesses it’s a STRONG seller market. For most other types of businesses it’s a MODERATE buyers market.
Overall we feel 2012 will be another strong year for business sales and M&A activity. If you’d like to discuss market trends for specific industries, feel free to give us a call.
