Spring 2014 Market Summary

March 03, 2014 by brian

Despite the bad weather experienced across most of the country, business brokerage activity remains high.

 

For larger businesses with EBITDA of $1M+, cash buyers and private equity funds are aggressively seeking investment opportunities. This demand is pushing down capitalization rates (increasing earning multiples) as well as creating multiple offer situations.

 

For smaller firms priced up to $1M, buyer activity is also strong, but seller financing is still necessary to close the gap and realize a higher sale price. We are advising our seller clients to anticipate up to 30% of the business price in the form of a seller note. However, with an improving economy, an earn-out may be a better option for a seller to eventually realize higher sale proceeds and benefit from future performance.

 

Maine Overview:

 

Buyers for Maine-based businesses are predominantly “lifestyle-driven”; looking for interesting opportunities that leverage the Maine brand. Smaller, niche manufacturers, food manufacturers and healthcare related businesses are also appealing. Earning multiples have increased from an average of 2.2 to a five year high of 2.5

 

New Hampshire Overview:

 

Technology firms, e-commerce businesses and large manufacturers continue to be the focus of buyer demand in New Hampshire. Financial buyers are seeking stable earnings and under-utilized, asset-based businesses. Capitalization rates continue to fall due to demand. We rate New Hampshire as a strong Seller market for specific sectors and industries.