Kansas City Business Broker Report

Chris Kerth’s Kansas City Business Broker Report is a reflection of the IBBA’s Market Pulse Survey. Information for the Kansas City Business Brokerage Report was accumulated from business brokers across the nation.

Murphy Business

Murphy Business

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). According to the survey, business sales remained strong in the Main Street and lower middle market in 2015. More than 60% of advisors met or exceeded their 2014 closure records. The outlook for 2016 seems to be a continuation of 2015.

Kansas City Business Broker Report

The Small Business Administration had a record year, lending in FY2015. But according to our study, only 29% of respondents’ deals under $2 million in value utilized SBA for financing, demonstrating just how incredibly active the Main Street market was in 2015.

Deals took longer to close across all sectors. When you eventually find a Buyer closing times nearly doubled in the Main Street market, while the lower middle market also saw jumps. Typically list to close is 9 months for those businesses that sell.  Valuation multiples haven’t seen much change over the last six quarters. Multiples remain strong, at or near market peaks.

“It’s a great time to sell because of the strong market. And these results go to show that if a business is priced correctly, it’s getting sold,” explained Michael Camerota, M&AMI, CBI Touchstone Advisors. “What we don’t know is how many businesses haven’t sold because they were listed over a realistic benchmark. If you work with the right business broker, they will have the tools and resources to price your business correctly.”

Pro Business Brokers

Murphy Business

HOT INDUSTRIES  Kansas City Business Brokerage Report suggests that Service companies (business and personal) continue to lead Main Street market activity in Q4, with a strong showing in the lower middle market as well. Manufacturing companies led the lower middle market. Main Street businesses sold for approximately 91% of their asking price in Q4 2015.

 

KNOW YOUR BUYER Size matters in deal multiples and buyer types. In the smallest deal category first time buyers accounted for the largest buyer segment. First time Buyers benefit from a broker’s involvement in these deals.

 

WHAT MOTIVATES THEM?  The Kansas City Business Brokerage Report reveals that Buyers in the Main Street market are most often motivated by a desire to buy a job. That is, the seller is looking to leave corporate America and be active full time in the business. Buyers in the lower middle market are more often expanding an existing business through a horizontal or vertical add-on. Q4 saw an increase in “growth through acquisition” motivated purchases across almost every market sector.

Chris Kerth begins the sales process with a Free, No-Obligation Market Analysis. We only get paid when the deal closes.

 

More information about Chris Kerth.

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