In General

Do you know who is likely to purchase the business you just decided to sell?  Or are you looking to buy a Business and don’t know where to start?  The Q1 2019 Market Pulse Survey* provides an overview with who’s buying, what Buyers are purchasing and why Buyers are buying. This information will assist you in targeting the appropriate Buyer or assist Buyers in identifying what they want.

Who: Type and Location of Buyer

For those who do end up buying a business, almost half of the businesses sold for <$500,000 were to first time buyers already living near the business.

<$500,000: Buyers in this sector tend to be:

  • First-time buyers (49%), serial entrepreneurs (30%), or existing companies (19%)
  • Located within 20 miles (68%) or more than 100 miles (14%) of the seller’s location

$500K-$1MM: Buyers in this sector tend to be:

  • First-time buyers (42%), existing companies (33%), serial entrepreneurs (19%)
  • Located within 20 miles (60%) or more than 100 miles (19%) of the seller’s location

$1MM-$2MM: Buyers in this sector tend to be:

  • Existing companies (34%), serial entrepreneurs (34%), or first-time buyers (21%)
  • Located within 20 miles (48%) or within 100 miles (28%) of the seller’s location

What: Top Industries

In the Main Street Market, buyers are primarily buying restaurants and personal services. In $1MM-$2MM purchase price, manufacturing, construction, and engineering are dominating industry transitions.

Figure 1: Top Industries by Market Sector

<$500KRestaurantsPersonal Services
$500K-$1MMConsumer Goods/RetailConstruction/Engineering
$1MM-$2MMManufacturingConstruction/Engineering

Why:  #1 Motivation

Buy A Job:  Over half (52%) of Buyers who purchased a business for <$500K were buying a job as were just over 1/3 of those in the >$500K-$1MM (35%) and $1MM-$2MM (38%).

Figure 2: #1 Motivation for Buyer

Now that you know the likely buyer and their motivation, you can target that buyer.  Likewise, if you are looking to purchase, identify your motivations before moving forward.

*The quarterly IBBA and M&A Source Market Pulse Survey was created to gain an accurate understanding of the market conditions for businesses being sold in Main Street (values $0-$2MM) and the lower middle market (values $2MM -$50MM).  The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors.  The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and the Pepperdine Graziado Business School.

The Q1 2019 survey was completed by 292 business brokers and M&A advisors. Respondents completed 257 transactions this quarter, the 28th edition of this quarterly report.

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