Greater Interest from PEGs and Former C-suite Individuals
Anecdotal evidence suggested advisors were fielding greater interest from private equity groups (PEGs) as well as individual buyers alike. Interest appears to be peaking among former C-suite individuals who generally have the net worth, the professional network, and the capabilities to consider business ownership. This quarter’s survey investigated that trend.
“We know pretty clearly what’s driving PEG activity in the Main Street and lower middle markets,” said Kyle Griffith, Managing Partner of The NYBB Group. “Increased demand for deals has many of these buyers moving down market to reduce competitive pressure. And the lending climate is such that it’s easier for these groups to find financing for smaller deals right now. Private equity will consider almost any deal size for a strategic add-on acquisition.”
“What’s less clear is why we’d be seeing a spike from C-suite individuals,” Griffith continued. “These high-net-worth individuals have always been an active part of the market, as they look to build something of their own and control their own destiny. Maybe we’re seeing some latent impact from the pandemic. Perhaps the Great Resignation is now reaching into the C-suite, as executives imagine a life with greater autonomy and freedom.”
BizBuySell surveyed 700 individuals seeking to purchase a business from July 2nd to July 10th, 2023. The Insights Report found that: forty-six percent (46%) said they want to leave their current job to be more in control of their future, with an additional 13% newly unemployed saying the same.
One potential buyer stated: “What we’re hearing from members is that they’re genuinely intrigued and eager to learn about what these tools can do,” said Kylene Golubski, Executive Director of the IBBA and M&A Source. “Generally advisors recognize that AI has the potential to improve efficiency. But not surprisingly, there are concerns about job displacement, ethics, and potential data vulnerabilities.
So for now, most are in wait and see mode.” “I have zero control over my salary. I haven’t had a raise in three years and it’s likely it won’t change much even if I go to another company. I want to take control over my financial health and earn a better income for the skill sets I have, not because someone else is trying to determine my value. Baby boomers are exiting the landscape and have done an incredible job building profitable, secure, recession-proof businesses.”