Market Summary Summer 2016
Welcome to summer in New England! While June-August have historically been the slowest months of brokerage activity, we are scheduled for a number of closings in the next 30 days and continue to see strong buyer activity. Recent macro events (Brexit & presidential politics) might have an impact on the economy, but we expect both southern ME & NH to be mostly sheltered from these disruptions.
Maine.
Last quarter I couldn’t imagine that Seller activity could get any slower but we are also a “victim of our own success”! We currently have almost ¼ of our listings under contract and are on track to exceed a sell rate of 70%--twice the industry average.
In general, we are seeing STRONG demand for seasonal “lifestyle” businesses and professional service firms. Our average time on market (listing to contract) for the last 24 months is now down to 168 days--the lowest in 12 years.
New Hampshire.
It looks like we’ll have a record year in New Hampshire! Our ability to cross-service buyers and sellers between Maine and New Hampshire has been a real strength for our company and allows us to better protect our clients confidentiality during listing.
Small manufacturers and E-commerce firms are generating the most demand and quickest sales but all business types are generating activity.
What does market conditions mean for buyers and sellers?
For buyers that means that there is upwards pricing pressure due to the low supply. That doesn’t imply that valuations are entering the “speculative” range, but it does mean that prices are trending towards the upper range rather than the lower or middle ranges we saw in ’10-’14. Buyers should be prepared to undertake due diligence, acquire financings and make offers when they identify an acquisition. We’ve seen 4 multiple offer situations in the last 7 closings.
For business owners that are considering an exit strategy this is a good time to sell. Interest rates are low, supply is low and the economy continues to be consistent with slow and steady growth. If you are within 5 years of exiting you should start planning now. Understanding valuation, improving your financial statements and discussing the tax implications of a sale are critical for a business owner. Don’t wait until the last minute!
