Business advisors are optimistic that the intense pace of mergers and acquisitions that occurred in 2021 is likely to continue into 2022. According to the Q4 2021 Market Pulse Report published by the International Business Brokers Association (IBBA) and M&A Source, almost half of advisors reported a significant increase in closed transactions than in 2020.
Time to close shrank in nearly all market segments. Businesses with a <$500K or less transaction price had a 6-month timeframe whereas for those in the $5MM to $50MM transaction price, the median time was 10 months.
“Businesses are selling faster in this market, and that’s a function of the increased competition we’re seeing,” said Jeff Swiggett, President of VR Business Sales Mergers & Acquisitions.
Seller-market sentiment rebounded in all market sectors, with more advisors describing Q4 2021 as a “seller’s market” than a year ago and setting a new peak in all but the $5MM-$50MM sector Q4 surveys for the past 8 years.
Multiples continue to remain consistent in all categories, at or near market peak in some sectors. For those businesses selling for less than $1MM, advisors predict additional multiple growth in 2022.
2021 top industries varied by market sector. Personal services, construction, business services, and consumer goods/retail led the Main Street market in 2021, while manufacturing, construction and wholesale/distribution led in the lower middle market.
About the Market Pulse Report
The Market Pulse Report compares conditions for businesses being sold on Main Street (values of $0-$2MM) to those being sold in the Lower Middle Market (values of $2MM-$50MM). The Q4 2021 survey was conducted January 1-15, 2022 and completed by 416 business brokers and M&A advisors. Respondents completed 379 transactions this quarter. This is the 39th edition of this quarterly report.
About International Business Brokers Association (IBBA) and the M&A Source
Founded in 1983, IBBA is the largest non-profit association specifically formed to meet the needs of people and firms engaged in various aspects of business brokerage and mergers and acquisitions. The IBBA is a trade association of business brokers providing education, conferences, professional designations and networking opportunities. For more information about IBBA, visit the website at www.ibba.org.