The following information is taken from the Q1 2024 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 (Earnings Before Interest, Taxes, Depreciation & Amortization) by Deal Size for the last 4 years
Valuation multiples remained relatively consistent across deals sizes, with one notable exception. Advisors reported that businesses with enterprise value of $5M-$50M had a noticeable increase in multiples up to 5.1x EBITDA, a meaningful jump over last year and an strong indication of the buyers confidence in larger companies
For the most part, “The Covid Effect” is no longer a consideration for buyers.
A combined 80% of respondents agreed or strongly agreed that buyers are mostly ignoring any “COVID slump” or “COVID bump” when assessing a company’s financials. Only 20% of M&A advisors disagreed, indicating some advisors believe that buyers are still putting significant weight on how companies performed during the COVID crisis.
If you’d like to read about some of the many (and some painful) lessons I have learned when selling my own businesses, please click below to download my free book
“What I Wish I knew When I Sold my Business”
How long does it take to sell a business?
The average time to sell a Main Street business varies from 7 to 9 months. Businesses in the Lower Middle Market, however, saw an uptick in time to sell. Businesses in the $5M-$50M sector took 13 months to sell, on average. That matches the peak average reported during the pandemic.
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.
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