The International Business Brokers Association (IBBA) surveys its membership to gain an accurate understanding of the current market conditions for businesses being sold. They usually look at two classes of businesses. First, those considered “Main Street” with values up to $2MM, and second, those considered “Lower Middle Market” with values from $2MM-$50MM. These two categories combined reflect the size range of a vast majority of businesses here in San Diego County. While the entire report is rather lengthy, here are some interesting highlights for both buyers and sellers of businesses in San Diego…..
In Main Street transactions (Less than $2MM in transaction value), the chart below illustrates the number of offers per deal as a percentage. It’s important to note that the number of offers tends to increase with the size of the transaction. However, what’s particularly striking is that for smaller transactions, business sellers often receive only one or two offers in total. This highlights the intense competition for larger transactions in the market, a factor that could significantly influence the decision-making process for both buyers and sellers.
For Lower Middle Market transactions ($2-50MM in transaction value), the chart below shows the number of offers per deal by percentage. As you can see from the chart, it is much more common for larger transactions to receive multiple offers.
The reason the seller of a business went to market was also surveyed. The primary reasons for selling their business were Retirement, with Burnout a distant second.
And who are the buyers purchasing these businesses? The charts below show the types of buyers for both Main Street and Lower Middle Market businesses. While these are national statistics, they represent what we are seeing with business buyers in San Diego.
If you are interested in selling your business, whether it operates on Main Street or in the Middle Market, there are buyers in the marketplace, and financing is available. Please reach out to Vanguard Resource Group, the San Diego leader in private business sales, if you would like to confidentially discuss your situation.
