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1
Market Pulse ReportFirst Quarter 2015
Scott Bushkie, CBI, M&AMI, IBBA Marketing Chair
Lisa Riley, Ph.D., CBI, IBBA Marketing Chair
Craig Everett, Ph.D. 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:
David M. Smith, Ph.D.Interim Dean
John K. Paglia, Ph.D.Associate Dean, Associate Professor of Finance
Cynthia ChiltonDirector of Marketing
Irina ShaykhutdinovaResearch Associate
4
I. About the Market Pulse Report……….……….…………........5
II. Current Business Environment……………………….…..……7
III. Business Transactions Closed in the Last 3 Months……….19
IV. Business Transactions Terminated in the Last 3 Months…..94
V. Business Expectations………………………………….....…..96VI. About the respondents………………..….………………..…..99
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
• 231 completed responses• Responses collected from April 1 to April 15, 2015
AbouttheSurvey
7
II. BusinessTransactionsClosedintheLast3Months
8
BusinessTransactions that WereClosedintheLastThreeMonthsbyDealSize
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$2million to$4.99million
Dealsvaluedfrom$5million to$50million
Wholesample 54% 18% 15% 10% 2%
9
NumberofBusinessTransactionsClosedbyRespondentsintheLast3Months
Numberofresponses=114
0
10
20
30
40
50
60
70
80
1 2 3 4 6Number ofRespondents 71 30 8 3 2
10
ChangeintheNumberofNewClientsbyDealSizeinTheLast3Months
Dealsize Greatlydecreased Decreased Stayed
thesame Increased Greatlyincreased
Score(1to5)
Dealsvaluedunder$499,999 3% 7% 27% 57% 6% 3.0
Dealsvaluedfrom$500,000to$999,999 2% 9% 36% 51% 2% 3.3
Dealsvaluedfrom$1millionto$1.99million 4% 9% 40% 46% 1% 3.3
Dealsvaluedfrom$2millionto$4.99million 4% 9% 35% 51% 1% 3.2
Dealsover$5million 3% 7% 47% 44% 0% 3.5
11
InthePast 3Months,Best Client Arrived by:
62%11%
6%
5%3%
2%2% 7%
Referral
Coldcalling
Companybranding
Targetmailer
Generalmailer
Networking
Publication/mediasource
Other
12
TypesofReferrals
30%
21%18%
15%
2%14%
Pastclient
Accountant
Attorney
Financialadvisor
Lender
Other
13
TypesofPublication/MediaSource
20%
80%
Radio Web
14
Was it Buyer’s or Seller’s Market intheLast3Months?
Number ofresponses 102 96 93 80 72
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$2million to$4.99million
Dealsvaluedfrom$5million to$50million
Buyer'smarket 59% 57% 51% 30% 14%
Seller'smarket 41% 43% 49% 70% 86%
15
TypeofAdvisorsWhoInfluencedtheBuyersinRespondentsMostRecentDeals
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Attorney CPA Intermediary Commercial Banker WealthAdvisor OtherWholesample 31% 30% 23% 8% 3% 5%
16
NumberofHoursRespondentsSpentonClosingtheQuickestDealsince2000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lessthanorequalto10
11- 20 21-30 31-40 41-50 51-100 101- 200 Morethan200
20%13% 10% 7% 10%
20%12%
8%
17
NumberofHoursRespondentsSpentonClosingtheLongestDealsince2000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lessthanorequalto10
101- 200 201- 300 301- 400 401- 500 501- 750 751-1000 Morethan1000
17% 17% 13% 9%4% 5%
18% 17%
18
AverageNumberofHoursRespondentsSpentonClosingOneDealsince2000
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Lessthanorequalto50
51-100 101- 200 201- 300 301- 400 401- 500 Morethan500
23% 24%16%
6% 11% 11% 9%
19
BusinessTransactionsofAllSizes,Comparison
20
MedianTimetoCloseaDeal(Months)
0
1
2
3
4
5
6
7
8
9
10
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M
5
7 7 7
11.5
21
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 2M- 5M
2.0
2.7
3.3
4.0
22
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
3.0
2.4
3.9
4.5
4.9
23
MultipleType
0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MSDEincluding workingcapital 23.9% 13.3% 16.0% 12.5% 25.0%
SDEnotincluding workingcapital 68.2% 73.3% 52.0% 37.5% 25.0%
EBITDAincluding workingcapital 1.1% 6.7% 24.0% 18.8% 50.0%
EBITDAnotincluding workingcapital 4.5% 6.7% 8.0% 18.8% 0.0%
TTMEBITDAincluding workingcapital 1.1% 0.0% 0.0% 12.5% 0.0%
TTMEBITDAnotincluding workingcapital 1.1% 0.0% 0.0% 0.0% 0.0%
24
BuyerType
0%10%20%30%40%50%60%70%80%90%100%
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M1sttimeindividual 45% 50% 40% 13% 0%individualwhoowned abusiness 31% 23% 36% 38% 0%existingcompany/strategicbuyer 24% 27% 20% 25% 25%PEfirm- Platform 0% 0% 0% 13% 0%PEfirm- Add-on 0% 0% 4% 6% 50%Other 0% 0% 0% 6% 25%
25
#1Reason forSeller to Go to Market
0%
20%
40%
60%
80%
100%
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MRecapitalization 1% 3% 0% 6% 0%Burntout 25% 17% 12% 6% 0%Familyissues 10% 7% 4% 6% 0%Health 2% 0% 8% 6% 0%Newopportunity 9% 7% 12% 13% 25%Relocation/moving 5% 10% 4% 0% 0%Retirement 38% 50% 56% 44% 50%Unsolicitedoffer 1% 3% 0% 13% 0%Other 9% 3% 4% 6% 25%
26
#1MotivationforBuyer
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MBuyingajob 51% 40% 32% 25% 0%
Better ROIthanotherinvestment 8% 13% 20% 31% 0%
Verticaladd-on 13% 17% 16% 25% 50%
Horizontal add-on 17% 20% 20% 13% 25%
Other 11% 10% 12% 6% 25%
27
FinancingStructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MBuyersequity 69% 45% 39% 38% 53%
Seniordebt 20% 37% 39% 51% 16%
Sellerfinancing 10% 17% 17% 7% 5%
Earnout 1% 1% 2% 4% 26%
Sellerretained equity 1% 1% 2% 0% 0%
28
SourceofBuyersEquity
0%10%20%30%40%50%60%70%80%90%100%
<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MCash 75% 75% 77% 72% 80%
401K/IRARollover 7% 14% 7% 0% 0%
HomeEquityLineofCredit (HELOC) 3% 3% 3% 6% 0%
Investors- family/friends 10% 3% 7% 17% 0%
Investors- other 1% 0% 0% 0% 0%
Crowdfunding 0% 0% 7% 6% 0%
Other 5% 6% 0% 0% 20%
29
ReasonsforTerminatedTransactionsintheLast3Months
0%10%20%30%40%50%60%70%80%90%100%
Unrealisticvaluation
Lackofbuyerpreparation
Poorsellerpreparation
Unreasonabledemand (non-
price)
Seller'smis-representation
Personalityconflicts
Minimalcorporatestructure
Other
Dealsvaluedunder$499,999 30% 18% 17% 15% 6% 5% 7% 3%
Dealsvaluedfrom$500,000to$999,999 24% 17% 21% 12% 6% 7% 6% 8%
Dealsvaluedfrom$1millionto$1.99million 30% 11% 13% 20% 5% 8% 5% 8%
Dealsvaluedfrom$2millionto$4.99million 33% 17% 17% 17% 2% 4% 7% 2%
Dealsvaluedfrom$5millionto$50million 28% 8% 17% 19% 4% 8% 7% 8%
30
II-I BusinessTransactionsValuedunder$499,999
NumberofClosedTransactions:88
31
TimetoClose
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
<1month
1month 2months 3months 4months 5months 6months 7months 8months 9months 1.1- 1.5years
1.6- 2years
>2years
Dealsunder500K 3% 3% 11% 15% 15% 10% 11% 2% 10% 3% 5% 7% 3%
32
Industry
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Businessservices
Services-personal
Consumergoods&Retail
Restaurants Wholesale&distribution
Construction&
engineering
Manufact. Healthcare&biotech
Services-financial
Basicmaterials&energy
Informationtechnology
Other
Dealsunder500K 19% 15% 13% 13% 10% 6% 6% 5% 2% 2% 1% 9%
33
SDEMultiplePaid
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 3.75 4 4.5 5 6 8.25Dealsunder 500K 2% 4% 6% 5% 6% 11% 17% 9% 12% 6% 10% 4% 1% 1% 1% 1% 1% 1%
Numberof responses:81
34
EBITDAMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0.25 2 2.5 3 6Dealsunder 500K 14% 14% 14% 43% 14%
Numberof responses:7
35
MultipleType
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SDEincludingworkingcapital
SDEnotincludingworkingcapital
EBITDAincludingworkingcapital
EBITDAnotincluding working
capital
TTMEBITDAincluding working
capital
TTMEBITDAnotincluding working
capitalDealsunder 500K 23.9% 68.2% 1.1% 4.5% 1% 1.1%
36
BuyerType
45.5%
30.7%
23.9%
1sttimeindividual
individualwhoowned abusiness
existingcompany/strategicbuyer
37
#1Reason forSeller to Go to Market
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Retirement Burnt out Familyissues New/betteropportunity
Relocation/moving
Health Recapitalization
Unsolicitedoffer
Other
Dealsunder 500K 38% 25% 10% 9% 5% 2% 1% 1% 9%
38
BuyerLocation(Distance)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within 20miles within 50miles within 100miles morethan100milesDealsunder 500K 55% 11% 11% 23%
39
BuyerLocation(Global)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within city within state within country international buyerDealsunder 500K 41% 38% 16% 6%
40
#1MotivationforBuyer
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Buyingajob Horizontal add-on Verticaladd-on Better ROIthanotherinvestment
Other
Dealsunder 500K 51% 17% 13% 8% 11%
41
FinancingStructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Buyersequity Seniordebt Sellerfinancing Earnout Sellerretained equityDealsunder 500K 69% 20% 10% 1% 1%
42
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 Investors-family/friends
401K/IRARollover HomeEquityLineofCredit (HELOC)
Investors- other Other
Dealsunder 500K 75.0% 9.6% 6.7% 2.9% 1.0% 4.8%
43
II-II BusinessTransactionsValuedfrom$500,000to$999,999
NumberofClosedTransactions:30
44
TimetoClose
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2months 3months 4months 5months 6months 7months 8months 9months 10months
12months
1.1- 1.5years
1.6- 2years
>2years
Dealsfrom$500Kto$1M 10% 13% 7% 13% 3% 7% 3% 10% 3% 10% 7% 3% 10%
45
Industry
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Businessservices
Consumergoods& Retail
Manufact. Services-personal
Construction&engineering
Healthcare&biotech
Wholesale&distribution
Services-financial
Basicmaterials&energy
Other
Dealsunder500K 20% 17% 13% 13% 10% 10% 3% 3% 3% 7%
46
SDEMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1.25 1.75 2 2.25 2.5 2.75 3 3.25 5 5.75Dealsfrom$500Kto$1M 4% 8% 8% 15% 15% 15% 23% 4% 4% 4%
Numberof responses:26
47
EBITDAMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0.25 1.5 3.25 4.75Dealsfrom$500Kto$1M 25% 25% 25% 25%
Numberof responses:4
48
MultipleType
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SDEincluding workingcapital
SDEnotincluding workingcapital
EBITDAincluding workingcapital
EBITDAnotincludingworkingcapital
Dealsfrom$500Kto$1M 13.3% 73.3% 6.7% 6.7%
49
BuyerType
50.0%
23.3%
26.7%
1sttimeindividual
individualwhoowned abusiness
existingcompany/strategicbuyer
50
#1Reason forSeller to Go to Market
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Retirement Burnt out Relocation/moving
New/betteropportunity
Familyissues Recapitalization Other
Dealsfrom$500Kto$1M 50% 17% 10% 7% 7% 3% 3%
51
BuyerLocation(Distance)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within 20miles within 50miles within 100miles morethan100milesDealsfrom$500Kto$1M 27% 40% 13% 20%
52
BuyerLocation(Global)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within city within state within country international buyerDealsfrom$500Kto$1M 33% 47% 13% 7%
53
#1MotivationforBuyer
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Buyingajob Horizontal add-on Verticaladd-on Better ROIthanotherinvestment
Other
Dealsfrom$500Kto$1M 40% 20% 17% 13% 10%
54
FinancingStructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Buyersequity Seniordebt Sellerfinancing Earnout Sellerretained equityDealsfrom$500Kto$1M 45% 37% 17% 1% 1%
55
SourceofBuyersEquity
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
Dealsfrom$500Kto$1M 75.0% 13.9% 2.8% 2.8% 5.6%
56
II-III BusinessTransactionsValuedfrom$1Millionto$1.99Million
NumberofClosedTransactions:25
57
TimetoClose
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
3months 4months 5months 6months 9months 10months 11months 1.1- 1.5years
1.6- 2years >2years
Dealsfrom$1Mto$2M 8% 8% 8% 16% 4% 20% 4% 16% 8% 8%
58
Industry
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Construction&engineering
Business services Consumer goods&Retail
Wholesale&distribution
Manufact. Services-personal
Restaurants Informationtechnology
Other
Dealsfrom$1Mto$2M 16% 16% 16% 16% 12% 8% 4% 4% 8%
59
SDEMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1.5 2 2.5 2.75 3 3.25 3.75 4.5 5 5.5 6Dealsfrom$1Mto$2M 6% 6% 12% 6% 18% 18% 12% 6% 6% 6% 6%
Numberof responses:17
60
EBITDAMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2 2.25 3.5 3.75 4 4.5Dealsfrom$1Mto$2M 13% 13% 13% 13% 38% 13%
Numberof responses:8
61
MultipleType
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SDEincluding workingcapital
SDEnotincluding workingcapital
EBITDAincluding workingcapital
EBITDAnotincludingworkingcapital
Dealsfrom$1Mto$2M 16% 52% 24% 8%
62
BuyerType
40%
36%
20%4%
1sttimeindividual
individualwhoowned abusiness
existingcompany/strategicbuyer
PEfirm- Add-on
63
#1Reason forSeller to Go to Market
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Retirement Burnt out New/betteropportunity
Health Relocation/moving
Familyissues Other
Dealsfrom$1Mto$2M 56% 12% 12% 8% 4% 4% 4%
64
BuyerLocation(Distance)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within 20miles within 50miles within 100miles morethan100milesDealsfrom$1Mto$2M 20% 32% 4% 44%
65
BuyerLocation(Global)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within city within state within country international buyerDealsfrom$1Mto$2M 20% 44% 32% 4%
66
#1MotivationforBuyer
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Buyingajob Horizontal add-on Better ROIthanotherinvestment
Verticaladd-on Other
Dealsfrom$1Mto$2M 32% 20% 20% 16% 12%
67
FinancingStructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Buyersequity Seniordebt Sellerfinancing Sellerretained equity EarnoutDealsfrom$1Mto$2M 39% 39% 17% 2% 2%
68
SourceofBuyersEquity
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- other Investors-family/friends
HomeEquityLineofCredit (HELOC)
Dealsfrom$1Mto$2M 76.7% 6.7% 6.7% 6.7% 3.3%
69
II-IV BusinessTransactionsValuedfrom$2Millionto$4.99Million
NumberofClosedTransactions:16
70
TimetoClose
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
3months 4months 6months 7months 9months 11months 12months 1.1- 1.5yearsDealsfrom$2Mto$5M 6% 13% 13% 13% 13% 13% 13% 19%
71
Industry
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Wholesale&distribution
Manufact. Informationtechnology
Services-personal
Business services Construction&engineering
Restaurants Basicmaterials&energy
Other
Dealsfrom$2Mto$5M 31% 19% 13% 6% 6% 6% 6% 6% 6%
72
SDEMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2.5 3.25 4 4.25 4.75 10Dealsfrom$2Mto$5M 13% 13% 38% 13% 13% 13%
Numberof responses:8
73
EBITDAMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
3 3.25 4.25 4.75 5 6.25Dealsfrom$2Mto$5M 13% 13% 25% 13% 25% 13%
Numberof responses:8
74
MultipleType
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SDEincluding workingcapital
SDEnotincludingworkingcapital
EBITDAincludingworkingcapital
EBITDAnotincludingworkingcapital
TTMEBITDAincludingworkingcapital
Dealsfrom$2Mto$5M 12.5% 37.5% 18.8% 18.8% 13%
75
BuyerType
12.5%
37.5%
25.0%
12.5%6.3%
6.3%
1sttimeindividual
individualwhoowned abusiness
existingcompany/strategicbuyer
PEfirm- Platform
PEfirm- Add-on
Other
76
#1Reason forSeller to Go to Market
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Retirement New/betteropportunity
Burnt out Health Familyissues Recapitalization Other
Dealsfrom$2Mto$5M 44% 13% 6% 6% 6% 6% 6%
77
BuyerLocation(Distance)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within 20miles within 50miles within 100miles morethan100milesDealsfrom$2Mto$5M 19% 19% 19% 44%
78
BuyerLocation(Global)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within city within state within countryDealsfrom$2Mto$5M 38% 25% 38%
79
#1MotivationforBuyer
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Better ROIthanotherinvestment
Verticaladd-on Buyingajob Horizontal add-on Other
Dealsfrom$2Mto$5M 31% 25% 25% 13% 6%
80
FinancingStructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Buyersequity Seniordebt Sellerfinancing EarnoutDealsfrom$2Mto$5M 38% 51% 7% 4%
81
SourceofBuyersEquity
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cash Investors- family/friends Investors- other HomeEquityLineofCredit(HELOC)
Dealsfrom$2Mto$5M 72% 17% 6% 6%
82
II-V BusinessTransactionsValuedOver$5 Million
NumberofClosedTransactions:4
83
TimetoClose
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
8months 11months 12months 1.6- 2yearsDealsfrom$5Mto$50M 25% 25% 25% 25%
84
Industry
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Construction&engineering Business services Information technologyDealsfrom$5Mto$50M 50% 25% 25%
85
EBITDAMultiplePaid
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
4 4.5 5.25 7Dealsfrom$5Mto$50M 25% 25% 25% 25%
86
MultipleType
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
EBITDAincluding workingcapital EBITDAnotincluding workingcapital
TTMEBITDAincluding workingcapital
Dealsfrom$5Mto$50M 25% 25% 50%
87
BuyerType
25%
50%
25%
existingcompany/strategicbuyer
PEfirm- Add-on
Other
88
#1Reason forSeller to Go to Market
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Retirement New/better opportunity OtherDealsfrom$5Mto$50M 50% 25% 25%
89
BuyerLocation(Distance)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within 20miles morethan100milesDealsfrom$5Mto$50M 25% 75%
90
BuyerLocation (Global)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
within state within country international buyerDealsfrom$5Mto$50M 25% 50% 25%
91
#1MotivationforBuyer
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Horizontal add-on Verticaladd-on OtherDealsfrom$5Mto$50M 25% 50% 25%
92
FinancingStructure
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Buyersequity Earnout SeniordebtDealsfrom$5Mto$50M 53% 26% 16%
93
SourceofBuyersEquity
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Cash OtherDealsfrom$5Mto$50M 80.0% 20.0%
94
III. BusinessTransactionsTerminatedintheLast3Months
95
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 26% 6% 16% 11% 6% 24% 2% 4% 4%
Dealsvaluedfrom$500,000to$999,999 27% 8% 15% 12% 6% 15% 6% 6% 5%
Dealsvaluedfrom$1million to$1.99million 27% 8% 15% 10% 8% 12% 3% 7% 9%
Dealsvaluedfrom$2million to$4.99million 28% 10% 9% 10% 9% 12% 3% 8% 10%
Dealsvaluedfrom$5million to$50million 26% 9% 11% 10% 9% 11% 4% 10% 10%
96
V. Expectations
97
Expectationsof Business Listings /Engagementsfrom New Clients intheNext3Months
Dealsize Greatlydecrease Decrease Staythe
same Increase Greatlyincrease
Score(1to5)
Dealsvaluedunder$499,999 1.0% 5.8% 21.2% 65.4% 6.7% 3.7
Dealsvaluedfrom$500,000to$999,999 0.0% 3.1% 32.7% 62.2% 2.0% 3.6
Dealsvaluedfrom$1million to$1.99million 0.0% 2.2% 35.9% 58.7% 3.3% 3.6
Dealsvaluedfrom$2million to$4.99million 0.0% 1.3% 26.6% 69.6% 2.5% 3.7
Dealsover$5million 0.0% 2.8% 31.0% 62.0% 4.2% 3.7
98
ExpectationsforBusinessValuationMultiples intheNext3Months
Dealsize Greatlydecrease Decrease Staythe
same Increase Greatlyincrease Score(1to5)
Dealsvaluedunder$499,999 0.0% 10.5% 75.2% 13.3% 1.0% 3.1
Dealsvaluedfrom$500,000to$999,999 0.0% 4.1% 82.5% 12.4% 1.0% 3.1
Dealsvaluedfrom$1million to$1.99million 0.0% 3.3% 79.3% 16.3% 1.1% 3.2
Dealsvaluedfrom$2million to$4.99million 0.0% 1.3% 68.8% 28.8% 1.3% 3.3
Dealsover$5million 0.0% 4.1% 67.6% 24.3% 4.1% 3.3
99
VI.AbouttheRespondents
100
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#
101
Totalnumberofresponses=230*Numberismorethannumberofrespondents asmanyrespondentsoverlapinto2or3areas
DetailsAbouttheRespondentsTypicalSizeofBusinessTransactions
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$2million to$4.99million
Dealsvaluedfrom$5million to$50million
Wholesample 51% 49% 47% 39% 37%
102
DetailsAbouttheRespondentsPercentageofRespondentsAffiliatedwithaFranchise
BrokerageFirm
20%
80%
Yes No
103
DetailsAbouttheRespondentsMemberships/MultipleMemberships
50%
34%
10%
8%
6%
6%
3%
3%
3%
2%
2%
2%
1%
1%
1%
1%
0% 10% 20% 30% 40% 50% 60%
IBBA
M&ASource
CaliforniaAssociationofBusiness Brokers
TexasAssociationofBusiness Brokers
Business BrokersofFlorida
NewEnglandBusinessBrokersAssociation
ColoradoAssociationof Business Intermediaries
Carolina- VirginiaBusinessBrokersAssociation
Mid-AtlanticBusinessIntermediariesAssociation,Inc.
ArizonaBusinessBrokersAssociation
MidwestBusinessBrokersIntermediaries
PennsylvaniaBusinessBrokersAssociation
FloridaBusinessBrokersAssociation
MichiganBusinessBrokersAssociation
NewYorkAssociationofBusinessBrokers
OhioBusiness BrokersAssociation
104
DetailsAbouttheRespondentsWorkingExperience
5% 6% 4% 5%4%5%4%
3%5%
2%6%20%
7%
25%
Lessthan1year
1year
2years
3years
4years
5years
6years
7years
8years
9years
10years
11-15years
16-20years
>20years
105
DetailsAbouttheRespondentsProfessionalCredentials
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CBI MBA M&AMI CBB CPA CMEA BCB CM&AA AM&AA BCI ABI ASA% 44% 29% 12% 10% 7% 5% 4% 4% 3% 2% 1% 1%
106
THANK YOU!
Scott Bushkie, CBI, M&AMI, IBBA Marketing [email protected]
Lisa Riley, Ph.D., CBI, IBBA Marketing [email protected]
Craig Everett, Ph.D. Director, Pepperdine Private Capital Markets Project
http://bschool.pepperdine.edu/[email protected]