Market Pulse Report First Quarter 20151 Market Pulse Report First Quarter 2015 Scott Bushkie, CBI,...

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Market Pulse ReportFirst Quarter 2015

Scott Bushkie, CBI, M&AMI, IBBA Marketing Chair

Lisa Riley, Ph.D., CBI, IBBA Marketing Chair

Craig Everett, Ph.D. Director, Pepperdine Private Capital Markets Project

2

This research was made possible with the support of the International Business Brokers Association (IBBA) and M&A

Source.

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ACKNOWLEDGEMENTS

We’d also like to thank the following people at The GraziadioSchool of Business and Management for their contributions:

David M. Smith, Ph.D.Interim Dean

John K. Paglia, Ph.D.Associate Dean, Associate Professor of Finance

Cynthia ChiltonDirector of Marketing

Irina ShaykhutdinovaResearch Associate

4

I. About the Market Pulse Report……….……….…………........5

II. Current Business Environment……………………….…..……7

III. Business Transactions Closed in the Last 3 Months……….19

IV. Business Transactions Terminated in the Last 3 Months…..94

V. Business Expectations………………………………….....…..96VI. About the respondents………………..….………………..…..99

Outline

5

The International Business Brokers Association (IBBA) and M&A

Source, in partnership with Pepperdine Private Capital Markets

Project, have set a goal to provide quality information on a

quarterly basis in order to become the go-to source for Main

Street and Lower Middle Market transactions. The “Market

Pulse Report” gives you timely and accurate data to help you

build and maintain a successful and sustainable business.

I.AbouttheMarketPulseReport

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• 25 questions• Invited participants were members of the

International Business Brokers Association (IBBA),IBBAAffiliates/Chapters, and/or M&A Source

• 231 completed responses• Responses collected from April 1 to April 15, 2015

AbouttheSurvey

7

II. BusinessTransactionsClosedintheLast3Months

8

BusinessTransactions that WereClosedintheLastThreeMonthsbyDealSize

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dealsvaluedunder$499,999

Dealsvaluedfrom$500,000to$999,999

Dealsvaluedfrom$1million to$1.99million


Dealsvaluedfrom$5million to$50million

Wholesample 54% 18% 15% 10% 2%

9

NumberofBusinessTransactionsClosedbyRespondentsintheLast3Months

Numberofresponses=114

0

10

20

30

40

50

60

70

80

1 2 3 4 6Number ofRespondents 71 30 8 3 2

10

ChangeintheNumberofNewClientsbyDealSizeinTheLast3Months

Dealsize Greatlydecreased Decreased Stayed

thesame Increased Greatlyincreased

Score(1to5)

Dealsvaluedunder$499,999 3% 7% 27% 57% 6% 3.0

Dealsvaluedfrom$500,000to$999,999 2% 9% 36% 51% 2% 3.3

Dealsvaluedfrom$1millionto$1.99million 4% 9% 40% 46% 1% 3.3

Dealsvaluedfrom$2millionto$4.99million 4% 9% 35% 51% 1% 3.2

Dealsover$5million 3% 7% 47% 44% 0% 3.5

11

InthePast 3Months,Best Client Arrived by:

62%11%

6%

5%3%

2%2% 7%

Referral

Coldcalling

Companybranding

Targetmailer

Generalmailer

Networking

Publication/mediasource

Other

12

TypesofReferrals

30%

21%18%

15%

2%14%

Pastclient

Accountant

Attorney

Financialadvisor

Lender

Other

13

TypesofPublication/MediaSource

20%

80%

Radio Web

14

Was it Buyer’s or Seller’s Market intheLast3Months?

Number ofresponses 102 96 93 80 72

0%10%20%30%40%50%60%70%80%90%100%






Buyer'smarket 59% 57% 51% 30% 14%

Seller'smarket 41% 43% 49% 70% 86%

15

TypeofAdvisorsWhoInfluencedtheBuyersinRespondentsMostRecentDeals

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Attorney CPA Intermediary Commercial Banker WealthAdvisor OtherWholesample 31% 30% 23% 8% 3% 5%

16

NumberofHoursRespondentsSpentonClosingtheQuickestDealsince2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lessthanorequalto10

11- 20 21-30 31-40 41-50 51-100 101- 200 Morethan200

20%13% 10% 7% 10%

20%12%

8%

17

NumberofHoursRespondentsSpentonClosingtheLongestDealsince2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lessthanorequalto10

101- 200 201- 300 301- 400 401- 500 501- 750 751-1000 Morethan1000

17% 17% 13% 9%4% 5%

18% 17%

18

AverageNumberofHoursRespondentsSpentonClosingOneDealsince2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Lessthanorequalto50

51-100 101- 200 201- 300 301- 400 401- 500 Morethan500

23% 24%16%

6% 11% 11% 9%

19

BusinessTransactionsofAllSizes,Comparison

20

MedianTimetoCloseaDeal(Months)

0

1

2

3

4

5

6

7

8

9

10

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M

5

7 7 7

11.5

21

MedianSDEMultiplePaid

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

<500K 500K- 1M 1M- 2M 2M- 5M

2.0

2.7

3.3

4.0

22

MedianEBITDAMultiplePaid

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M

3.0

2.4

3.9

4.5

4.9

23

MultipleType

0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MSDEincluding workingcapital 23.9% 13.3% 16.0% 12.5% 25.0%

SDEnotincluding workingcapital 68.2% 73.3% 52.0% 37.5% 25.0%

EBITDAincluding workingcapital 1.1% 6.7% 24.0% 18.8% 50.0%

EBITDAnotincluding workingcapital 4.5% 6.7% 8.0% 18.8% 0.0%

TTMEBITDAincluding workingcapital 1.1% 0.0% 0.0% 12.5% 0.0%

TTMEBITDAnotincluding workingcapital 1.1% 0.0% 0.0% 0.0% 0.0%

24

BuyerType

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50M1sttimeindividual 45% 50% 40% 13% 0%individualwhoowned abusiness 31% 23% 36% 38% 0%existingcompany/strategicbuyer 24% 27% 20% 25% 25%PEfirm- Platform 0% 0% 0% 13% 0%PEfirm- Add-on 0% 0% 4% 6% 50%Other 0% 0% 0% 6% 25%

25

#1Reason forSeller to Go to Market

0%

20%

40%

60%

80%

100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MRecapitalization 1% 3% 0% 6% 0%Burntout 25% 17% 12% 6% 0%Familyissues 10% 7% 4% 6% 0%Health 2% 0% 8% 6% 0%Newopportunity 9% 7% 12% 13% 25%Relocation/moving 5% 10% 4% 0% 0%Retirement 38% 50% 56% 44% 50%Unsolicitedoffer 1% 3% 0% 13% 0%Other 9% 3% 4% 6% 25%

26

#1MotivationforBuyer

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MBuyingajob 51% 40% 32% 25% 0%

Better ROIthanotherinvestment 8% 13% 20% 31% 0%

Verticaladd-on 13% 17% 16% 25% 50%

Horizontal add-on 17% 20% 20% 13% 25%

Other 11% 10% 12% 6% 25%

27

FinancingStructure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MBuyersequity 69% 45% 39% 38% 53%

Seniordebt 20% 37% 39% 51% 16%

Sellerfinancing 10% 17% 17% 7% 5%

Earnout 1% 1% 2% 4% 26%

Sellerretained equity 1% 1% 2% 0% 0%

28

SourceofBuyersEquity

0%10%20%30%40%50%60%70%80%90%100%

<500K 500K- 1M 1M- 2M 2M- 5M 5M- 50MCash 75% 75% 77% 72% 80%

401K/IRARollover 7% 14% 7% 0% 0%

HomeEquityLineofCredit (HELOC) 3% 3% 3% 6% 0%

Investors- family/friends 10% 3% 7% 17% 0%

Investors- other 1% 0% 0% 0% 0%

Crowdfunding 0% 0% 7% 6% 0%

Other 5% 6% 0% 0% 20%

29

ReasonsforTerminatedTransactionsintheLast3Months

0%10%20%30%40%50%60%70%80%90%100%

Unrealisticvaluation

Lackofbuyerpreparation

Poorsellerpreparation

Unreasonabledemand (non-

price)

Seller'smis-representation

Personalityconflicts

Minimalcorporatestructure

Other

Dealsvaluedunder$499,999 30% 18% 17% 15% 6% 5% 7% 3%

Dealsvaluedfrom$500,000to$999,999 24% 17% 21% 12% 6% 7% 6% 8%

Dealsvaluedfrom$1millionto$1.99million 30% 11% 13% 20% 5% 8% 5% 8%

Dealsvaluedfrom$2millionto$4.99million 33% 17% 17% 17% 2% 4% 7% 2%

Dealsvaluedfrom$5millionto$50million 28% 8% 17% 19% 4% 8% 7% 8%

30

II-I BusinessTransactionsValuedunder$499,999

NumberofClosedTransactions:88

31

TimetoClose

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

<1month

1month 2months 3months 4months 5months 6months 7months 8months 9months 1.1- 1.5years

1.6- 2years

>2years

Dealsunder500K 3% 3% 11% 15% 15% 10% 11% 2% 10% 3% 5% 7% 3%

32

Industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Businessservices

Services-personal

Consumergoods&Retail

Restaurants Wholesale&distribution

Construction&

engineering

Manufact. Healthcare&biotech

Services-financial

Basicmaterials&energy

Informationtechnology

Other

Dealsunder500K 19% 15% 13% 13% 10% 6% 6% 5% 2% 2% 1% 9%

33

SDEMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.25 0.75 1 1.25 1.5 1.75 2 2.25 2.5 2.75 3 3.25 3.75 4 4.5 5 6 8.25Dealsunder 500K 2% 4% 6% 5% 6% 11% 17% 9% 12% 6% 10% 4% 1% 1% 1% 1% 1% 1%

Numberof responses:81

34

EBITDAMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.25 2 2.5 3 6Dealsunder 500K 14% 14% 14% 43% 14%


35

MultipleType

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SDEincludingworkingcapital

SDEnotincludingworkingcapital

EBITDAincludingworkingcapital

EBITDAnotincluding working

capital

TTMEBITDAincluding working

capital

TTMEBITDAnotincluding working

capitalDealsunder 500K 23.9% 68.2% 1.1% 4.5% 1% 1.1%

36

BuyerType

45.5%

30.7%

23.9%

1sttimeindividual

individualwhoowned abusiness

existingcompany/strategicbuyer

37


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement Burnt out Familyissues New/betteropportunity

Relocation/moving

Health Recapitalization

Unsolicitedoffer

Other

Dealsunder 500K 38% 25% 10% 9% 5% 2% 1% 1% 9%

38

BuyerLocation(Distance)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsunder 500K 55% 11% 11% 23%

39

BuyerLocation(Global)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within country international buyerDealsunder 500K 41% 38% 16% 6%

40


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Buyingajob Horizontal add-on Verticaladd-on Better ROIthanotherinvestment

Other

Dealsunder 500K 51% 17% 13% 8% 11%

41

FinancingStructure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing Earnout Sellerretained equityDealsunder 500K 69% 20% 10% 1% 1%

42

SourceofBuyersEquity(MultipleChoices)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash Investors-family/friends

401K/IRARollover HomeEquityLineofCredit (HELOC)

Investors- other Other

Dealsunder 500K 75.0% 9.6% 6.7% 2.9% 1.0% 4.8%

43

II-II BusinessTransactionsValuedfrom$500,000to$999,999


44

TimetoClose

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2months 3months 4months 5months 6months 7months 8months 9months 10months

12months

1.1- 1.5years

1.6- 2years

>2years

Dealsfrom$500Kto$1M 10% 13% 7% 13% 3% 7% 3% 10% 3% 10% 7% 3% 10%

45

Industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Businessservices

Consumergoods& Retail

Manufact. Services-personal

Construction&engineering

Healthcare&biotech

Wholesale&distribution

Services-financial

Basicmaterials&energy

Other

Dealsunder500K 20% 17% 13% 13% 10% 10% 3% 3% 3% 7%

46

SDEMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1.25 1.75 2 2.25 2.5 2.75 3 3.25 5 5.75Dealsfrom$500Kto$1M 4% 8% 8% 15% 15% 15% 23% 4% 4% 4%


47

EBITDAMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0.25 1.5 3.25 4.75Dealsfrom$500Kto$1M 25% 25% 25% 25%


48

MultipleType

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SDEincluding workingcapital

SDEnotincluding workingcapital

EBITDAincluding workingcapital

EBITDAnotincludingworkingcapital

Dealsfrom$500Kto$1M 13.3% 73.3% 6.7% 6.7%

49

BuyerType

50.0%

23.3%

26.7%

1sttimeindividual



50


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement Burnt out Relocation/moving

New/betteropportunity

Familyissues Recapitalization Other

Dealsfrom$500Kto$1M 50% 17% 10% 7% 7% 3% 3%

51


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsfrom$500Kto$1M 27% 40% 13% 20%

52


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within country international buyerDealsfrom$500Kto$1M 33% 47% 13% 7%

53


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Buyingajob Horizontal add-on Verticaladd-on Better ROIthanotherinvestment

Other

Dealsfrom$500Kto$1M 40% 20% 17% 13% 10%

54

FinancingStructure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing Earnout Sellerretained equityDealsfrom$500Kto$1M 45% 37% 17% 1% 1%

55


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash 401K/IRARollover HomeEquityLineofCredit (HELOC)

Investors-family/friends

Other

Dealsfrom$500Kto$1M 75.0% 13.9% 2.8% 2.8% 5.6%

56

II-III BusinessTransactionsValuedfrom$1Millionto$1.99Million


57

TimetoClose

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

3months 4months 5months 6months 9months 10months 11months 1.1- 1.5years

1.6- 2years >2years

Dealsfrom$1Mto$2M 8% 8% 8% 16% 4% 20% 4% 16% 8% 8%

58

Industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Construction&engineering

Business services Consumer goods&Retail


Manufact. Services-personal

Restaurants Informationtechnology

Other

Dealsfrom$1Mto$2M 16% 16% 16% 16% 12% 8% 4% 4% 8%

59

SDEMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1.5 2 2.5 2.75 3 3.25 3.75 4.5 5 5.5 6Dealsfrom$1Mto$2M 6% 6% 12% 6% 18% 18% 12% 6% 6% 6% 6%


60

EBITDAMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2 2.25 3.5 3.75 4 4.5Dealsfrom$1Mto$2M 13% 13% 13% 13% 38% 13%


61

MultipleType

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


SDEnotincluding workingcapital

EBITDAincluding workingcapital


Dealsfrom$1Mto$2M 16% 52% 24% 8%

62

BuyerType

40%

36%

20%4%

1sttimeindividual



PEfirm- Add-on

63


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement Burnt out New/betteropportunity

Health Relocation/moving

Familyissues Other

Dealsfrom$1Mto$2M 56% 12% 12% 8% 4% 4% 4%

64


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsfrom$1Mto$2M 20% 32% 4% 44%

65


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within country international buyerDealsfrom$1Mto$2M 20% 44% 32% 4%

66


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Buyingajob Horizontal add-on Better ROIthanotherinvestment

Verticaladd-on Other

Dealsfrom$1Mto$2M 32% 20% 20% 16% 12%

67

FinancingStructure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing Sellerretained equity EarnoutDealsfrom$1Mto$2M 39% 39% 17% 2% 2%

68


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash 401K/IRARollover Investors- other Investors-family/friends

HomeEquityLineofCredit (HELOC)

Dealsfrom$1Mto$2M 76.7% 6.7% 6.7% 6.7% 3.3%

69

II-IV BusinessTransactionsValuedfrom$2Millionto$4.99Million


70

TimetoClose

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

3months 4months 6months 7months 9months 11months 12months 1.1- 1.5yearsDealsfrom$2Mto$5M 6% 13% 13% 13% 13% 13% 13% 19%

71

Industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


Manufact. Informationtechnology

Services-personal

Business services Construction&engineering

Restaurants Basicmaterials&energy

Other

Dealsfrom$2Mto$5M 31% 19% 13% 6% 6% 6% 6% 6% 6%

72

SDEMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2.5 3.25 4 4.25 4.75 10Dealsfrom$2Mto$5M 13% 13% 38% 13% 13% 13%


73

EBITDAMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

3 3.25 4.25 4.75 5 6.25Dealsfrom$2Mto$5M 13% 13% 25% 13% 25% 13%


74

MultipleType

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


SDEnotincludingworkingcapital

EBITDAincludingworkingcapital


TTMEBITDAincludingworkingcapital

Dealsfrom$2Mto$5M 12.5% 37.5% 18.8% 18.8% 13%

75

BuyerType

12.5%

37.5%

25.0%

12.5%6.3%

6.3%

1sttimeindividual



PEfirm- Platform

PEfirm- Add-on

Other

76


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement New/betteropportunity

Burnt out Health Familyissues Recapitalization Other

Dealsfrom$2Mto$5M 44% 13% 6% 6% 6% 6% 6%

77


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles within 50miles within 100miles morethan100milesDealsfrom$2Mto$5M 19% 19% 19% 44%

78


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within city within state within countryDealsfrom$2Mto$5M 38% 25% 38%

79


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Better ROIthanotherinvestment

Verticaladd-on Buyingajob Horizontal add-on Other

Dealsfrom$2Mto$5M 31% 25% 25% 13% 6%

80

FinancingStructure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Seniordebt Sellerfinancing EarnoutDealsfrom$2Mto$5M 38% 51% 7% 4%

81


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cash Investors- family/friends Investors- other HomeEquityLineofCredit(HELOC)

Dealsfrom$2Mto$5M 72% 17% 6% 6%

82

II-V BusinessTransactionsValuedOver$5 Million


83

TimetoClose

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

8months 11months 12months 1.6- 2yearsDealsfrom$5Mto$50M 25% 25% 25% 25%

84

Industry

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Construction&engineering Business services Information technologyDealsfrom$5Mto$50M 50% 25% 25%

85

EBITDAMultiplePaid

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

4 4.5 5.25 7Dealsfrom$5Mto$50M 25% 25% 25% 25%

86

MultipleType

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EBITDAincluding workingcapital EBITDAnotincluding workingcapital

TTMEBITDAincluding workingcapital

Dealsfrom$5Mto$50M 25% 25% 50%

87

BuyerType

25%

50%

25%


PEfirm- Add-on

Other

88


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Retirement New/better opportunity OtherDealsfrom$5Mto$50M 50% 25% 25%

89


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within 20miles morethan100milesDealsfrom$5Mto$50M 25% 75%

90

BuyerLocation (Global)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

within state within country international buyerDealsfrom$5Mto$50M 25% 50% 25%

91


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Horizontal add-on Verticaladd-on OtherDealsfrom$5Mto$50M 25% 50% 25%

92

FinancingStructure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Buyersequity Earnout SeniordebtDealsfrom$5Mto$50M 53% 26% 16%

93


0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Cash OtherDealsfrom$5Mto$50M 80.0% 20.0%

94

III. BusinessTransactionsTerminatedintheLast3Months

95

The Biggest Mistake Sellers Make That HurtTheir Chance of Successfully

Completing theDeal

0%10%20%30%40%50%60%70%80%90%100%

Unrealisticexpectatio

ns

Emotionaltiesto

business/can'tletgo

Decliningbusinesssales

Waitingtoo

long/burntout

Nonresponsive/

timelag

Poorfinancialrecords

Negativeattitude/e

go

Other Nothing

Dealsvaluedunder$499,999 26% 6% 16% 11% 6% 24% 2% 4% 4%

Dealsvaluedfrom$500,000to$999,999 27% 8% 15% 12% 6% 15% 6% 6% 5%

Dealsvaluedfrom$1million to$1.99million 27% 8% 15% 10% 8% 12% 3% 7% 9%

Dealsvaluedfrom$2million to$4.99million 28% 10% 9% 10% 9% 12% 3% 8% 10%

Dealsvaluedfrom$5million to$50million 26% 9% 11% 10% 9% 11% 4% 10% 10%

96

V. Expectations

97

Expectationsof Business Listings /Engagementsfrom New Clients intheNext3Months

Dealsize Greatlydecrease Decrease Staythe

same Increase Greatlyincrease

Score(1to5)

Dealsvaluedunder$499,999 1.0% 5.8% 21.2% 65.4% 6.7% 3.7

Dealsvaluedfrom$500,000to$999,999 0.0% 3.1% 32.7% 62.2% 2.0% 3.6

Dealsvaluedfrom$1million to$1.99million 0.0% 2.2% 35.9% 58.7% 3.3% 3.6


Dealsover$5million 0.0% 2.8% 31.0% 62.0% 4.2% 3.7

98

ExpectationsforBusinessValuationMultiples intheNext3Months

Dealsize Greatlydecrease Decrease Staythe

same Increase Greatlyincrease Score(1to5)

Dealsvaluedunder$499,999 0.0% 10.5% 75.2% 13.3% 1.0% 3.1

Dealsvaluedfrom$500,000to$999,999 0.0% 4.1% 82.5% 12.4% 1.0% 3.1



Dealsover$5million 0.0% 4.1% 67.6% 24.3% 4.1% 3.3

99

VI.AbouttheRespondents

100

DetailsAbouttheRespondentsGeographicLocation

01-23-56-78-1011-1516-20more than 20

CA#

OR#

WA#

MT# ND# MN#

ID#WY#

SD#

NV#UT#

AZ#

CO#

NM#

TX#

NE#

KS#

OK# AR#

LA#MS# AL#

FL#

GA#

TN#SC#

NC#

VA#WV#KY#MO#

IL#IA#

WI#MI#

IN#OH#

MD#

PA#NJ#

NY#

ME#

NH#VT#MA#RI#

CT#

HI#AK#

101

Totalnumberofresponses=230*Numberismorethannumberofrespondents asmanyrespondentsoverlapinto2or3areas

DetailsAbouttheRespondentsTypicalSizeofBusinessTransactions

0%10%20%30%40%50%60%70%80%90%100%






Wholesample 51% 49% 47% 39% 37%

102

DetailsAbouttheRespondentsPercentageofRespondentsAffiliatedwithaFranchise

BrokerageFirm

20%

80%

Yes No

103

DetailsAbouttheRespondentsMemberships/MultipleMemberships

50%

34%

10%

8%

6%

6%

3%

3%

3%

2%

2%

2%

1%

1%

1%

1%

0% 10% 20% 30% 40% 50% 60%

IBBA

M&ASource

CaliforniaAssociationofBusiness Brokers

TexasAssociationofBusiness Brokers

Business BrokersofFlorida

NewEnglandBusinessBrokersAssociation

ColoradoAssociationof Business Intermediaries

Carolina- VirginiaBusinessBrokersAssociation

Mid-AtlanticBusinessIntermediariesAssociation,Inc.

ArizonaBusinessBrokersAssociation

MidwestBusinessBrokersIntermediaries

PennsylvaniaBusinessBrokersAssociation

FloridaBusinessBrokersAssociation

MichiganBusinessBrokersAssociation

NewYorkAssociationofBusinessBrokers

OhioBusiness BrokersAssociation

104

DetailsAbouttheRespondentsWorkingExperience

5% 6% 4% 5%4%5%4%

3%5%

2%6%20%

7%

25%

Lessthan1year

1year

2years

3years

4years

5years

6years

7years

8years

9years

10years

11-15years

16-20years

>20years

105

DetailsAbouttheRespondentsProfessionalCredentials

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

CBI MBA M&AMI CBB CPA CMEA BCB CM&AA AM&AA BCI ABI ASA% 44% 29% 12% 10% 7% 5% 4% 4% 3% 2% 1% 1%

106

THANK YOU!

Scott Bushkie, CBI, M&AMI, IBBA Marketing [email protected]

Lisa Riley, Ph.D., CBI, IBBA Marketing [email protected]

Craig Everett, Ph.D. Director, Pepperdine Private Capital Markets Project

http://bschool.pepperdine.edu/[email protected]

Market Pulse Report First Quarter 20151 Market Pulse Report First Quarter 2015 Scott Bushkie, CBI,...

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