MBB From Brian

Market Summary: Spring 2016

After record-breaking activity in Q1 2016, attractive acquisition opportunities are in great demand.

April 04, 2016

Market Update: Spring 2016

Maine

After record-breaking activity in Q1 2016, attractive acquisition opportunities are in great demand. Buyer demand finally seems to be putting upward pressures on valuations with recent deals realizing the higher end the multiple/capitalization range. Other trends/comments:

  1. A noticeable increase in Sellers inquiring about exit strategies. These are both baby boomers looking to retire and owners looking to exit at the top of the market rather than risk the next cyclical downturn.
  2. Increase in “Main St” buyers looking for, and making, acquisitions. There has been a noticeable increase in middle-class buyers who have been mostly absent since the 2008 downturn. This is due to increased confidence in the economy and gains in home equity values.
  3. Aggressive lending and quicker loan packaging. Banks are working to put money on the street.
  4. Increase in younger (sub 35yo) buyers. We are seeing younger buyers; late 20’s to mid 30’s.
  5. We are continuing to see more multiple buyers/offers for businesses.
  6. There are an estimated 250 businesses listed for sale state-wide. Close to an all-time low.

New Hampshire

Sales continue to be brisk, with renewed activity in restaurants and hospitality.

  1. There are an estimated 300 businesses listed for sale state-wide. That is slightly above average for the state but there is a concentration in hospitality properties.
  2. Successful closings. The “failure rate” of deals (that don’t get to a closing) is very low.

Outlook

Sellers. Given the 1-2 year timeframe for selling a business we are recommending business owners that have less than a 5 year exit window should start the process now: meet with your professional advisors to plan the next steps. For business owners with an exit timeline of 5-10 years we recommend they start planning now. Have a business valuation done, set business goals that help increase the value and salability of your business and meet with a tax advisor about the ramifications of selling and preparing your personal finances for post-close or retirement life.

Buyers. We have been advising buyers that we are in a strengthening economy that favors sellers. It’s becoming more difficult to find undervalued acquisitions or a seller willing to “play bank” and provide the majority of financing in a seller note. Buyers looking to make an acquisition should be prepared for timely due diligence, making a fair price offer, locking in a deal with a strong LOI with good faith deposit and shooting for a near-term closing.

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