The following information is taken from the Q4 2023 IBBA and M&A Source Market survey report. This report in specially related to the sales of small and midsized companies.
The Value of Your Business When Selling
The following chart shows the Average Multiple of EBITDA by Deal Size in the 4th quarter of 2023 compared to 2022
Valuation multiples remained relatively consistent across deals sizes, with one notable exception. Advisors reported that businesses with enterprise value of $5M-$50M received an average valuation of 5.3x EBITDA, a meaningful jump over last year and an strong indication of the buyers confidence in larger companies.
As interest rates rose in 2023, the structure of deals included more “earnouts”, or seller carrybacks
The average time to sell a small business has stayed, basically the same over the last several years, varying from seven to 10 months. Of that time roughly three to four months are spent in due diligence, after a signed letter of intent or offer.
As always, if you would like to discuss the future possibility of exiting your business and the proper planning for doing so, I would love to talk with you. Just click on the link below to set a time on my calendar and I would look forward to our conversation.