Recently, the International Business Brokers Association (IBBA) released the results of its Q2 survey, The IBBA and M&A Source Market Pulse Report. This survey features feedback from an impressive 301 brokerage professionals across 44 U.S. states with 266 transactions taking place in the quarter. The report presents numerous key findings that will be of interest to those seeking to buy or sell a business.
The Emergence of Covid-Proof Businesses
One key fact of interest is that 25% of businesses are still operating below capacity due to the pandemic’s enduring impact. The Market Pulse Report concluded that a quarter of all small and medium-sized businesses are either in a position where they are temporarily closed or are operating below capacity. On the other side of the equation, the survey noted that 29% of businesses have either emerged as “COVID proof” or have actually benefited from the pandemic.
For sellers with COVID resistant businesses, now could be an excellent time to sell. For buyers, there are potential deals to be had, especially for those who are willing to look beyond the current pandemic-fueled environment and towards the future.
Why are Sellers Selling?
The report also noted that burnout is a major factor impacting deal activity. Retirement continues to be the leading reason why businesses are selling, but burnout has become a quickly rising secondary reason.
The top five reasons leading to sellers putting their businesses on the market are: retirement (35%), burnout (27%), health (15%), tax increases (7%), and general COVID fatigue (7%). The pandemic is still likely playing a role in the minds of many business owners who are looking to sell, which means buyers could find good deals due to the pandemic. It is important for buyers to note that as pandemic conditions improve, many of today’s good deals will likely vanish.
While the IBBA and M&A Source Market Pulse Report noted that over the last year it took longer for deals to close in most sections, there were exceptions to that rule. For example, in the $5 million to $50 million sector, there has actually been an acceleration. On average, deals in that range are taking a mere ten months to close.