The Market Pulse Executive Report is a collaboration between The International Business Brokers Association® and M&A Source, providing quality market information on a quarterly basis as the premier source for insight on Main Street and Lower Middle Market Transactions.
Rocky Mountain Business Advisors brings you exclusive access to select key market information in the 2024 Q3 report—information typically reserved for contributing members.
Overview of the 2024 Q3 Market Pulse Survey:
The Q3 Market Pulse Survey was conducted from October 1-15, 2024, and was completed by 340 business brokers and M&A advisors. The Q3 2024 Market Pulse Survey, conducted by the IBBA and M&A Source, analyzes market conditions for Main Street businesses ($0-$2M) and Lower Middle Market (LMM) businesses ($2M-$50M).
Key Insights in 2024:
- Both buyers and sellers in the Main Street and LMM markets have shown hesitancy due to upcoming elections. Sellers are particularly cautious in the Main Street market (48%), compared to 38% in the LMM.
- Declining interest rates boosted optimism, with 69% of Main Street advisors and 65% of LMM advisors expecting increased deal activity. However, only 31.8% and 37.5% of Main Street and LMM advisors, respectively, anticipated rising valuations.
- While deal flow spiked, overall activity was hindered by economic and regulatory uncertainty.
Q3 2024 Data:
Market Trends:
- Multiples for smaller businesses (<$1M) remained stable. Larger deals showed fluctuations influenced by high interest rates and cautious lending.
- Sellers received 76-92% cash at closing, with the $5M-$50M sector relying on earnouts and equity retention.
- Retirement dominated as a reason for sale, particularly in larger deals ($5M-$50M). Smaller deals were driven by burnout (19%) and new opportunities (17%).
Buyer Insights:
- Buyers for smaller businesses (<$1M) were primarily first-time buyers (52%), while the LMM saw more strategic buyers (37-39%) and PE firms (32%).
- Buyer proximity varied: 67% of Main Street buyers were within 20 miles, while 47% of LMM buyers were over 100 miles away.
Industry Focus:
- Personal services and consumer goods were strong in the Main Street market, while construction, engineering, and manufacturing dominated the LMM market.
- Deals averaged 2-3 offers, with larger deals attracting more buyer interest.
This survey highlights a mixed yet optimistic market, balancing the effects of declining interest rates against economic uncertainties like election outcomes.