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Manufacturing & Distribution Companies Are The Most Sought After Acquisitions

Most Sought After Acquisitions
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Manufacturing & Distribution Companies Are The Most Sought After Acquisitions In 2015 According To National Survey

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). The national survey was conducted with the intent of providing a valuable resource to business owners and their advisors. The IBBA and M&A Source present the Market Pulse Survey with the support of the Pepperdine Private Capital Markets Project and the Graziadio School of Business and Management at Pepperdine University.

The Q2 2015 survey was completed by 249 business brokers and M&A advisors, representing 37 states. More than half of the respondents (60%) had at least 10 years of experience.

MARKET ADVANTAGE AND VALUATIONS

Here are some survey highlights:

The lower middle market continues to present as a strong seller’s market. Year-over-year, the strength of that sentiment has increased significantly. However, advisers are indicating a slight dip since market peak in Q1 this year. The large supply of well-financed buyers still significantly outweighs the number of quality sellers in the current market.

 

Advisors indicating a seller's market

Compared to Q1, transaction values shrank 0.5 points for businesses valued between $2MM-$5MM but grew 0.1 points for businesses valued between $5MM-$50MM. Year-over-year, however, multiples show a slightly more marked decline.

 

Median EBITDA multiple paid

 

BUYER LOCATION

The larger the deal, the farther buyers will travel. In the $2MM-$5MM sector, the majority of buyers (48%) were located within a 100-mile radius. But in the $5MM-$50MM sector, most buyers (58%) were located more than 100 miles away from the seller. Figure 9: Buyer Location (Relative to Seller)

 

Buyer location (relative to seller)

 

BUYER TYPE

Buyers in the $5MM-$50MM sector were most likely to be an existing company/strategic buyer or private equity firm.

However, individual buyers were very active in the $2MM-$5MM sector.

 

Buyer Type

 

HOT INDUSTRY ACQUISITIONS

Of the most sought after acquisitions, manufacturing and wholesale/distribution ranked among the leading industries for the lower middle market in this sector. Construction/engineering and business services also held leading positions.

 

Most Sought After Acquisitions

 

Manufacturing & distribution companies are expected to stay in high demand and one of the most sought after acquisitions during 2016.  Contact Us with any questions.

About Frances Brunelle

Frances Brunelle is the founder of Accelerated Manufacturing Brokers, Inc., which specializes in the sale of lower middle-market manufacturing companies nationally. Fran and her team help to ensure the continuity of U.S. Manufacturing by transitioning ownership to the next generation of entrepreneurs. Recently Fran was named to 2020 Most Influential Women in Mid-Market M&A (Mergers & Acquisitions). Fran is also the host of the WAM (Women and Manufacturing) podcast, a Jacket Media production. Fran writes on topics that help manufacturing business owners prepare their companies for sale and navigate the sale process to ensure a positive financial result in support of their retirement.

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