Delta Business Acumen

In the Main Street market, restaurants and personal services trended throughout the sector. In the Lower MiddleMarket, construction/engineering and manufacturing dominated transactions.

Over the last eight quarters, private equity has captured an average 41% of the deals in this sector while strategics accounted for 40% of buyers (see figure below)

The average time to sell a Main Street business varies from 7 to 9 months. Businesses in the LowerMiddle Market, however, saw an uptick in time to sell. The offer to close stayed somewhat consistent with the larger businesses taking a bit longer.

The average time to sell a Main Street business varies from 7 to 9 months. Businesses in the LowerMiddle Market, however, saw an uptick in time to sell. Businesses in the $5M-$50M sector took 13months to sell, on average. That matches the peak average reported during the pandemic.

“We expected to see earnouts rise as a response to COVID-19 bumps and slumps, but it’s been interest rates that have really been the driver,” said Simon Harrison, Senior Advisor of Boss Group International. “Earnouts can be a way for sellers to receive their desired valuation, while buyers mitigate their… Read More »Percentage of $5M-$50M Deals Financing by Earnouts 2021-2024

Cash at close includes senior debt and buyer equity. Seller financing accounted for 15%-17% or more of most deals in Q4 2024. For deals valued between $5 million to $50 million, earnouts (6%) and retained equity (3%) also played a meaningful role in financing.

Advisors reported an uptick in seller confidence, although still well off previous peaks. (A seller’smarket occurs when demand exceeds supply. In a seller’s market, buyers compete in order to windeals. This typically translates to increased values and more favorable deal terms for the seller.)

Multiples remained consistent across the Main Street market. Meanwhile, advisors reported a meaningful increase in multiples (up a half percentage point or better, year over year) in the Lower Middle Market.

On average, sellers are receiving valuations at 85% of benchmark or better. As is the trend,businesses in the Lower Middle Market performed the best, receiving all or nearly the privatebenchmark they set with their advisors before going to market.