market pulse report second quarter 2014 · market pulse report second quarter 2014 scott bushkie,...

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Market Pulse ReportSecond Quarter 2014

Scott Bushkie, CBI, M&AMI, IBBA Marketing Chair

Lisa Riley, Ph.D. IBBA Marketing Chair

Craig Everett, Ph.D., MBA Assistant Professor of Finance

Director, Pepperdine Private Capital Markets Project

2

This research was made possible with the support of the International Business Brokers Association (IBBA) and M&A

Source.

3

ACKNOWLEDGEMENTS

We’d also like to thank the following people at The GraziadioSchool of Business and Management for their contributions:

Dean Linda LivingstoneAssociate Dean David M. Smith

Mike Sims, Executive Officer, CERJohn K. Paglia, Associate Professor of Finance

Douglass Gore, Director of Public RelationsMark Chun, Director, Center for Applied Research

Bill Bleuel, Professor of Decision SciencesIrina Shaykhutdinova, Research Analyst

4

I. About the Market Pulse Report……….……….…………........5

II. Current Business Environment……………………….…..……7

III. Business Transactions Closed in the Last 3 Months……….11

IV. Business Transactions Terminated in the Last 3 Months…..96

V. Business Expectations…………………………………....…...99VI. About the respondents………………..….………………..…102

Outline

5

The International Business Brokers Association (IBBA) and M&A

Source, in partnership with Pepperdine Private Capital Markets

Project, have set a goal to provide quality information on a

quarterly basis in order to become the go-to source for Main

Street and Lower Middle Market transactions. The “Market

Pulse Report” gives you timely and accurate data to help you

build and maintain a successful and sustainable business.

I.AbouttheMarketPulseReport

6

• 25 questions• Invited participants were members of the

International Business Brokers Association (IBBA),IBBAAffiliates/Chapters, and/or M&A Source

• 202 completed responses• Responses collected from July 1 to July 15, 2014

AbouttheSurvey

7

IV. CurrentBusinessEnvironment

8

CurrentlyActiveBusinessTransactions /Engagements byDealSize

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dealsvaluedunder$499,999

Dealsvaluedfrom$500,000to$999,999

Dealsvaluedfrom$1million to$1.99million


Dealsvaluedfrom$5million to$50million

% 53% 17% 12% 11% 7%

9

BusinessTransactions That Are Currently inEscrow/Accepted LOI/Due Diligence byDealSize

0%10%20%30%40%50%60%70%80%90%100%






% 50% 11% 15% 17% 7%

10

PercentageofBabyBoomersasNewClients

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Ofyournewlistingclientsin2014,whatpercentageareBabyBoomers?

Ofyournew'buyer'clientsin2014,whatpercentageareBabyBoomers?

64%

39%

11

II. BusinessTransactionsClosedintheLast3Months

12

NumberofBusinessTransactionsClosedbyRespondentsintheLast3Months

Numberofresponses=101

0

10

20

30

40

50

60

1 2 3 4 5 6 8 10 >10Number ofRespondents 54 19 14 5 4 1 1 2 1

13

ChangeintheNumberofNewClientsbyDealSizeinTheLast3Months

Dealsize Greatlydecreased Decreased Stayed

thesame Increased Greatlyincreased

Score(1to5)

Dealsvaluedunder$499,999 2% 11% 35% 46% 5% 3.3

Dealsvaluedfrom$500,000to$999,999 4% 15% 41% 37% 4% 3.5

Dealsvaluedfrom$1millionto$1.99million 3% 9% 47% 41% 1% 3.6

Dealsvaluedfrom$2millionto$4.99million 5% 10% 44% 40% 2% 3.5

Dealsover$5million 5% 12% 36% 40% 7% 3.3

14

InthePast 3Months,Best Client Arrived by:


60%10%

6%

5%5%

5%3% 7%

Referral

Networking

Companybranding

Coldcalling

Targetmailer

Publication/mediasource

Generalmailer

Other

15

TypesofReferrals

41%

18%

13%

12%Pastclient

Attorney

Financialadvisor

Accountant

16

Was it Buyer’s or Seller’s Market intheLast3Months?

Number ofresponses 96 81 80 63 42

0%10%20%30%40%50%60%70%80%90%100%






Buyer'smarket 69% 53% 53% 49% 31%

Seller'smarket 31% 47% 48% 51% 69%

17

ReasonsForTheRobustActivityInToday’sMarket

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Morebuyers Betterperformingbusinesses

Strongerconfidence/lessuncertainty

Moresellers Lowinterestrates/cheapmoney

Moreaggressivefinancing

Excessivecashoncorporatebalancesheets

Other

% 20% 19% 18% 17% 10% 9% 3% 3%

18

NumberofClientsWhoTriedtoSellTheirBusinessOnTheir OwnPriortoContacting

Respondents

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 1 2 3 4 5 6 9 10+% 44% 32% 12% 5% 2% 3% 1% 1% 1%

19

NumberofClientsWhoTriedtoSellTheirBusinessViaAnotherBrokerPriortoContacting

Respondents

0%10%20%30%40%50%60%70%80%90%100%

0 1 2 3 4 5 6% 51% 29% 11% 5% 1% 2% 1%

20

NumberofClientsWhoApproachedbyaBuyerPriorContactingRespondents

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 1 2 3 4 5% 47% 26% 21% 3% 1% 2%

21

NumberofClientsWhoApproachedbyAnotherBrokerPriortoContactingRespondents

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 1 2 3 4 5 6 7 10+% 35% 24% 20% 9% 4% 4% 2% 1% 1%

22

BusinessTransactionsClosedintheLast3MonthsbyDealSize

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%






% 57% 17% 16% 6% 4%

23

BusinessTransactionsofAllSizes,Comparison

24

MedianTimetoCloseaDeal(Months)

0

1

2

3

4

5

6

7

8

9

10

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M

3

5

6 6 6

25

MedianSDEMultiplePaid

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

<500K 500K- 1M 1M- 2M

2.0

2.83.1

26

MedianEBITDAMultiplePaid

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M

2.62.9

4.34.5

5.4

27

MultipleType

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MSDEincludingworkingcapital 15% 16% 26% 0% 0%SDEnot includingworkingcapital 65% 46% 47% 9% 0%EBITDAincludingworkingcapital 3% 11% 0% 36% 0%EBITDAnot includingworkingcapital 16% 24% 5% 36% 50%TTMEBITDAincludingworkingcapital 0% 0% 11% 18% 50%TTMEBITDAnotincludingworkingcapital 0% 3% 11% 0% 0%

28

BuyerType

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M1sttimeindividual 55% 49% 32% 64% 0%individualwhoowned abusiness 32% 31% 21% 27% 25%existingcompany/strategicbuyer 11% 17% 42% 9% 25%PEfirm- Platform 0% 0% 5% 0% 50%PEfirm- Add-on 0% 0% 0% 0% 0%Other 2% 3% 0% 0% 0%

29

#1Reason forSeller to Go to Market

0%

20%

40%

60%

80%

100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MAcquisition 1% 3% 5% 9% 0%Burntout 18% 11% 11% 0% 0%Familyissues 15% 6% 0% 18% 50%Health 12% 9% 5% 0% 0%Newopportunity 18% 29% 16% 9% 0%Potentialtaxesincreases 0% 0% 0% 0% 0%Relocation/moving 11% 11% 5% 9% 0%Retirement 18% 29% 53% 36% 25%Unsolicitedoffer 0% 0% 0% 9% 25%Other 6% 3% 5% 9% 0%

30

#1MotivationforBuyer

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MBuyingajob 56% 34% 5% 18% 0%BetterROIthanotherinvestment 10% 29% 11% 36% 0%Verticaladd-on 8% 17% 16% 18% 0%Horizontaladd-on 13% 11% 42% 18% 25%Other 13% 9% 26% 9% 75%

31

FinancingStructure

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MBuyersequity 73% 54% 64% 62% 25%Seniordebt 10% 21% 27% 23% 43%Sellerfinancing 13% 18% 9% 10% 0%Earnout 0% 3% 1% 1% 27%Sellerretainedequity 1% 2% 0% 3% 5%Mezzaninefinancing 0% 0% 0% 0% 0%Other 2% 2% 0% 1% 0%

32

SourceofBuyersEquity

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MCash 77% 69% 77% 64% 50%401K/IRARollover 7% 10% 5% 0% 0%HomeEquityLineofCredit(HELOC) 5% 5% 0% 0% 0%Investors- family/friends 9% 10% 5% 14% 0%Investors- other 0% 5% 14% 21% 50%Other 2% 0% 0% 0% 0%

33

II-I BusinessTransactionsValuedunder$499,999

34

TimetoClose

Numberofclosedtransactions=123

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

<1month

1month 2months

3months

4months

5months

6months

7months

8months

9months

10months

11months

12months

1.1- 1.5years

1.6- 2years

>2years

Dealsunder500K 11% 7% 26% 13% 4% 6% 11% 7% 3% 2% 2% 2% 2% 3% 1% 2%

35

Industry


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Services-personal

Restaurants Consumergoods&Retail

Businessservices

Healthcare&biotech

Construction&

engineering

Wholesale&distribution

Services-financial

Manufact. Informationtechnology

Basicmaterials&energy

Other

Dealsunder500K 23% 22% 13% 9% 5% 5% 4% 3% 3% 1% 1% 11%

36

SDEMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.25 0.5 0.75 1 1.25 1.5 1.75 2 2.25 2.5 2.75 3 3.5 4 4.5 10Dealsunder 500K 6% 4% 1% 5% 4% 12% 13% 15% 10% 7% 7% 5% 2% 6% 1% 1%

37

EBITDAMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.25 0.75 1 1.25 1.5 1.75 2 2.25 2.5 2.75 3 3.25 8.25Dealsunder 500K 8% 4% 8% 4% 8% 4% 8% 4% 25% 4% 8% 4% 8%

38

MultipleType


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SDEincluding workingcapital

SDEnotincluding workingcapital

EBITDAincluding workingcapital

EBITDAnotincludingworkingcapital

Dealsunder 500K 15.4% 65.0% 3.3% 16.3%

39

BuyerType:Deals<$500,000


54.8%32.2%

11.3%

1.7%1sttimeindividual

individualwhoowned abusiness

existingcompany/strategicbuyer

Other

40



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement Burnt out New/betteropportunity

Familyissues Health Relocation/moving

Recapitalization

Other

Dealsunder 500K 18% 18% 18% 15% 12% 11% 1% 6%

41

BuyerLocation(Distance)


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsunder 500K 50% 22% 3% 24%

42

BuyerLocation(Global)


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within country international buyerDealsunder 500K 43% 28% 19% 10%

43



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Buyingajob Horizontal add-on Better ROIthanotherinvestment

Verticaladd-on Other

Dealsunder 500K 56% 13% 10% 8% 13%

44

FinancingStructure


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Sellerfinancing Seniordebt Sellerretained equity OtherDealsunder 500K 73% 13% 10% 1% 2%

45

SourceofBuyersEquity(MultipleChoices)


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash 401K/IRARollover HomeEquityLineofCredit (HELOC)

Investors-family/friends

Other

Dealsunder 500K 77.0% 7.1% 5.3% 8.8% 1.8%

46

II-II BusinessTransactionsValuedfrom$500,000to$999,999

47

TimetoClose


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1month 2months 3months 4months 5months 6months 7months 8months 9months 11months 12months 1.1- 1.5years

Dealsfrom$500Kto$1M 5% 16% 14% 5% 14% 8% 3% 5% 3% 3% 16% 8%

48

Industry


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Consumergoods& Retail

Businessservices

Services-personal

Restaurants Wholesale&distribution

Healthcare&biotech

Construction&engineering

Services-financial

Informationtechnology

Other

Dealsunder500K 19% 16% 8% 8% 8% 5% 5% 5% 3% 22%

49

SDEMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1.5 2 2.25 2.5 2.75 3 3.5 3.75 4Dealsfrom$500Kto$1M 4% 4% 17% 13% 13% 35% 4% 4% 4%

50

EBITDAMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.25 1.75 2 2.25 2.5 2.75 3 4 4.5 7.5 >10Dealsfrom$500Kto$1M 7% 7% 7% 7% 7% 14% 14% 14% 7% 7% 7%

51

MultipleType


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


SDEnotincludingworkingcapital

EBITDAincludingworkingcapital


TTMEBITDAnotincluding working

capitalDealsfrom$500Kto$1M 16.2% 45.9% 10.8% 24.3% 2.7%

52

BuyerType:Deals$500,000- $999,999


48.6%

31.4%

17.1%

2.9%1sttimeindividual



Other

53



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement New/betteropportunity

Burnt out Relocation/moving

Health Familyissues Recapitalization

Other

Dealsfrom$500Kto$1M 29% 29% 11% 11% 9% 6% 3% 3%

54



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsfrom$500Kto$1M 43% 31% 6% 20%

55



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within country international buyerDealsfrom$500Kto$1M 34% 46% 17% 3%

56



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Buyingajob Horizontal add-on Better ROIthanotherinvestment

Verticaladd-on Other

Dealsfrom$500Kto$1M 34% 11% 29% 17% 9%

57

FinancingStructure


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing Earnout Sellerretainedequity

Other

Dealsfrom$500Kto$1M 54% 21% 18% 3% 2% 2%

58



0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash 401K/IRARollover Investors-family/friends

HomeEquityLineofCredit (HELOC)

Investors- other

Dealsfrom$500Kto$1M 69.2% 10.3% 10.3% 5.1% 5.1%

59

II-III BusinessTransactionsValuedfrom$1Millionto$1.99Million

60

TimetoClose


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1month 2months 6months 8months 9months 12months 1.1- 1.5years 1.6- 2yearsDealsfrom$1Mto$2M 21% 16% 16% 11% 11% 11% 11% 5%

61

Industry


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Business services Healthcare&biotech Consumer goods&Retail

Services- personal Wholesale&distribution Other

Dealsfrom$1Mto$2M 21% 16% 11% 11% 11% 32%

62

SDEMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2 2.5 2.75 3 3.25 3.5 4Dealsfrom$1Mto$2M 21% 7% 7% 14% 29% 14% 7%

63

EBITDAMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

3 3.5 4.25 4.5 6Dealsfrom$1Mto$2M 20% 20% 20% 20% 20%

64

MultipleType


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


SDEnotincludingworkingcapital


TTMEBITDAincludingworkingcapital

TTMEBITDAnotincluding working

capitalDealsfrom$1Mto$2M 26.3% 47.4% 5.3% 11% 10.5%

65

BuyerType:Deals$1Million- $1.99Million


31.6%

21.1%

42.1%

5.3%

1sttimeindividual



PEfirm- Platform

66



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement New/betteropportunity

Burnt out Relocation/moving

Health Recapitalization Other

Dealsfrom$1Mto$2M 53% 16% 11% 5% 5% 5% 5%

67



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsfrom$1Mto$2M 63% 5% 5% 26%

68



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within country international buyerDealsfrom$1Mto$2M 42% 26% 16% 16%

69



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Horizontal add-on Better ROIthanotherinvestment

Verticaladd-on Buyingajob Other

Dealsfrom$1Mto$2M 42% 11% 16% 5% 26%

70

FinancingStructure


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing EarnoutDealsfrom$1Mto$2M 64% 27% 9% 1%

71



0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash Investors- other 401K/IRARollover Investors- family/friendsDealsfrom$1Mto$2M 77.3% 13.6% 4.5% 4.5%

72

II-IV BusinessTransactionsValuedfrom$2Millionto$4.99Million

73

TimetoClose


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2months 3months 4months 5months 6months 7months 8months 10months 1.6- 2yearsDealsfrom$2Mto$5M 9% 18% 9% 9% 9% 9% 18% 9% 9%

74

Industry


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Wholesale&distribution

Manufact. Business services Healthcare&biotech

Consumer goods&Retail

Restaurants Informationtechnology

Dealsfrom$2Mto$5M 27% 27% 9% 9% 9% 9% 9%

75

EBITDAMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

3 3.25 3.5 4 5 5.5 8Dealsfrom$2Mto$5M 20% 10% 10% 10% 30% 10% 10%

76

MultipleType


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SDEnotincluding workingcapital

EBITDAincluding workingcapital


TTMEBITDAincludingworkingcapital

Dealsfrom$2Mto$5M 9.1% 36.4% 36.4% 18%

77

BuyerType:Deals$2Million- $4.99Million


63.6%

27.3%

9.1%



PEfirm- Platform

78



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement Familyissues New/betteropportunity

Relocation/moving Recapitalization Other

Dealsfrom$2Mto$5M 36% 18% 9% 9% 9% 9%

79



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 50miles within 100miles morethan100milesDealsfrom$2Mto$5M 45% 18% 36%

80



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within state within country international buyerDealsfrom$2Mto$5M 36% 55% 9%

81



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Better ROIthanotherinvestment

Horizontal add-on Verticaladd-on Buyingajob Other

Dealsfrom$2Mto$5M 36% 18% 18% 18% 9%

82

FinancingStructure


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing Sellerretainedequity

Earnout Other

Dealsfrom$2Mto$5M 62% 23% 10% 3% 1% 1%

83



0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash Investors- other Investors- family/friendsDealsfrom$2Mto$5M 64.3% 21.4% 14.3%

84

II-V BusinessTransactionsValuedOver$5 Million

85

TimetoClose


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2months 3months 9months 12monthsDealsfrom$5Mto$50M 25% 25% 25% 25%

86

Industry


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Business services Manufact. Consumer goods&Retail

Dealsfrom$5Mto$50M 50% 25% 25%

87

EBITDAMultiplePaid


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

4.25 4.75 6Dealsfrom$5Mto$50M 25% 25% 50%

88

MultipleType


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EBITDAnotincluding workingcapital TTMEBITDAincluding workingcapitalDealsfrom$5Mto$50M 50.0% 50%

89

BuyerType:Deals>$5Million


25.0%

25.0%

50.0%



PEfirm- Platform

90



0%5%10%15%20%25%30%35%40%45%50%

Familyissues RetirementDealsfrom$5Mto$50M 50% 25%

91



0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles morethan100milesDealsfrom$5Mto$50M 50% 50%

92

BuyerLocation (Global)


0%5%10%15%20%25%30%35%40%45%50%

within city within countryDealsfrom$5Mto$50M 50% 50%

93



0%5%10%15%20%25%30%35%40%45%50%

Horizontal add-on OtherDealsfrom$5Mto$50M 25% 75%

94

FinancingStructure


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Seniordebt Earnout Buyersequity Sellerretained equityDealsfrom$5Mto$50M 43% 27% 25% 5%

95


Numberofresponses=4

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%

Cash Investors- otherDealsfrom$5Mto$50M 50.0% 50.0%

96

III. BusinessTransactionsTerminatedintheLast3Months

97

PercentageofBusinessTransactionsbySizeTerminatedWithoutClosingintheLast3

Months

TotalNumberofResponses=83

0%10%20%30%40%50%60%70%80%90%100%






% 78% 4% 6% 8% 4%

98

The Biggest Mistake Sellers Make That HurtTheir Chance of Successfully

Completing theDeal

0%10%20%30%40%50%60%70%80%90%100%

Unrealisticexpectatio

ns

Emotionaltiesto

business/can'tletgo

Decliningbusinesssales

Waitingtoo

long/burntout

Nonresponsive/ timelag

Poorfinancialrecords

Negativeattitude/e

go

Other Nothing

Dealsvaluedunder$499,999 62% 22% 44% 27% 8% 54% 7% 6% 6%

Dealsvaluedfrom$500,000to$999,999 60% 19% 32% 27% 11% 32% 9% 8% 5%

Dealsvaluedfrom$1million to$1.99million 66% 34% 36% 34% 8% 28% 9% 11% 14%

Dealsvaluedfrom$2million to$4.99million 61% 29% 24% 23% 20% 24% 12% 13% 13%

Dealsvaluedfrom$5million to$50million 54% 25% 25% 19% 18% 15% 7% 16% 6%

99

V. Expectations

100

Expectationsof Business Listings /Engagementsfrom New Clients intheNext3Months

Dealsize Greatlydecrease Decrease Staythe

same Increase Greatlyincrease

Score(1to5)

Dealsvaluedunder$499,999 0.0% 6.3% 32.3% 58.3% 3.1% 3.6

Dealsvaluedfrom$500,000to$999,999 0.0% 1.3% 22.5% 71.3% 5.0% 3.8

Dealsvaluedfrom$1million to$1.99million 1.3% 2.6% 26.9% 66.7% 2.6% 3.7


Dealsover$5million 0.0% 2.4% 31.7% 63.4% 2.4% 3.7

101

ExpectationsforBusinessValuationMultiples intheNext3Months

Dealsize Greatlydecrease Decrease Staythe

same Increase Greatlyincrease Score(1to5)

Dealsvaluedunder$499,999 0.0% 5.3% 75.8% 18.9% 0.0% 3.1

Dealsvaluedfrom$500,000to$999,999 0.0% 3.8% 74.7% 21.5% 0.0% 3.2



Dealsover$5million 0.0% 2.4% 61.0% 36.6% 0.0% 3.3

102

VI.AbouttheRespondents

103

DetailsAbouttheRespondentsGeographicLocation

01-23-56-78-1011-1516-20more than 20

CA#

OR#

WA#

MT# ND# MN#

ID#WY#

SD#

NV#UT#

AZ#

CO#

NM#

TX#

NE#

KS#

OK# AR#

LA#MS# AL#

FL#

GA#

TN#SC#

NC#

VA#WV#KY#MO#

IL#IA#

WI#MI#

IN#OH#

MD#

PA#NJ#

NY#

ME#

NH#VT#MA#RI#

CT#

HI#AK#

104

Totalnumberofresponses=202*Numberismorethannumberofrespondents asmanyrespondentsoverlapinto2or3areas

DetailsAbouttheRespondentsTypicalSizeofBusinessTransactions

0%10%20%30%40%50%60%70%80%90%100%






Wholesample 52% 44% 43% 35% 22%

105

DetailsAbouttheRespondentsMemberships/MultipleMemberships

50%

29%

27%

7%

6%

4%

4%

3%

2%

2%

1%

1%

1%

1%

1%

1%

10%

5%

0% 10% 20% 30% 40% 50% 60%

IBBA

M&ASource

BusinessBrokers ofFlorida

California Association ofBusiness Brokers

FloridaBusinessBrokers Association

GeorgiaAssociation ofBusiness Brokers

NewEnglandBusinessBrokersAssociation

Colorado Association ofBusiness Intermediaries

Carolina - VirginiaBusinessBrokers Association

TexasAssociation ofBusiness Brokers

ArizonaBusinessBrokers Association

Mid-Atlantic BusinessIntermediaries Association, Inc.

MichiganBusinessBrokersAssociation

MidwestBusinessBrokersIntermediaries

OhioBusinessBrokersAssociation

PennsylvaniaBusinessBrokers Association

Other

None

106

DetailsAbouttheRespondentsWorkingExperience

7%5%

4%5%

3%

9%

6%1%5%3%7%

19%

7%

17%

Lessthan1year

1year

2years

3years

4years

5years

6years

7years

8years

9years

10years

11-15years

16-20years

>20years

107

DetailsAbouttheRespondentsProfessionalCredentials

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CBI MBA CBB M&AMI CMEA BCI CPA AM&AA CM&AA ABI CMSBB ASA Other None% 43% 25% 10% 9% 7% 5% 4% 3% 2% 1% 1% 1% 23% 23%

108

DetailsAbouttheRespondents

109

THANK YOU!

Scott Bushkie, CBI, M&AMI, IBBA Marketing [email protected]

Lisa Riley, Ph.D., IBBA Marketing [email protected]

Craig Everett, Ph.D., MBA Assistant Professor of Finance

Director, Pepperdine Private Capital Markets Projecthttp://bschool.pepperdine.edu/privatecapital

[email protected]

market pulse report second quarter 2014 · market pulse report second quarter 2014 scott bushkie,...

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