Market Overview

National Survey: Business Brokers Say 2018 is the Best Year to Sell a Business in Last Five Years

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Small businesses (<$2 MM) struggling to find qualified workers and
talent shortage is impacting ability to sell business

Optimism in the M&A market is at an all-time high according
to findings from the Q2 2018 Market
Pulse Report
published by the International
Business Brokers Association
(IBBA), M&A
Source
and the Pepperdine
Private Capital Market Project
. Twenty-one percent of business
advisors surveyed say 2018 is the best year they've ever seen for
business owners to sell their businesses. Another 37 percent say it's
the best time in five years, and 17 percent say it's the best in the
last 10 years.

Consistent with general market optimism advisors believe seller
advantage is growing, with year-over-year seller-market sentiment
increases in all market sectors. In the Main Street market, for
businesses valued at less than $500,000, seller market sentiment is at
the highest it's been since the survey started in 2013.

"The current environment means there may never be a better time to sell
your business," said Craig Everett, PhD, Assistant Professor of Finance
and Director of the Pepperdine Private Capital Markets Project at the Pepperdine
Graziadio Business School
. "Capital is readily available from
lenders, private equity firms, and family offices, and existing
companies have record cash sitting on the sidelines. Interest rates are
still relatively low, the economy is going strong with an estimated 4.3
percent GDP growth in Q2 2018, and business confidence remains high.
Well-run companies are doing well in the M&A market right now."

"For many sellers, this is the time to take some chips off the table and
head for the exit. Savvy business owners are taking advantage of the
strong seller's market, even though they aren't ready to retire," said
Mike Camerota, JD, M&AMI, CM&AP, Founder of Touchstone Advisors, M&A
Source Chair. "The idea is to maximize value by selling now, diversify
their net worth, and then buy or start another business where they see
opportunity."

Advisors are split on how the low unemployment rate is impacting
business transitions. In the Main Street market, 28 percent of advisors
believe talent shortages are hurting the ability to close deals while 16
percent say it's helping. Numbers look slightly different in the lower
middle market, with 18 percent saying it hurts deal-making and 19
percent saying it helps.

"Organic growth is a challenge right now because businesses of every
size are struggling to find qualified talent. Low unemployment can be a
particular challenge for small and mid-sized businesses trying to
compete," said David Ryan, an advisor with Upton Financial Group. "When
it is hard to find talent, it is hard to grow organically, leading
owners to grow through acquisition of existing businesses with staff who
know their customers."

"But the talent dynamics can be a bit different in Main Street where
turnover is often higher," Ryan continued. "Buyers may be hesitant to
take on an understaffed business or one that comes with a lot of hiring
challenges."

About the Market Pulse Report

The Market Pulse Report compares conditions for businesses being sold on
Main Street (values of $0-$2MM) to those being sold in the Lower Middle
Market (values of $2MM-$50MM). The Q2 2018 survey was completed by 277
business brokers and M&A advisors.

About International Business Brokers Association (IBBA) and the M&A
Source

Founded in 1983, IBBA is the largest non-profit association specifically
formed to meet the needs of people and firms engaged in various aspects
of business brokerage and mergers and acquisitions. The IBBA is a trade
association of business brokers providing education, conferences,
professional designations and networking opportunities. For more
information about IBBA, visit the website at www.ibba.org
or follow the IBBA on Facebook,
Twitter
and LinkedIn.

Founded in 1991, the M&A Source promotes professional development of
merger and acquisition professionals so that they may better serve their
clients' needs and maximize public awareness of professional
intermediary services available for middle market merger and acquisition
transactions. For more information about the M&A Source visit www.masource.org,
or follow the M&A Source on Facebook,
LinkedIn
and Twitter.

About Pepperdine University Graziadio Business School

Anchored in the core values of integrity and innovation, the Pepperdine
Graziadio Business School
challenges individuals to think boldly and
drive meaningful change that positively impacts their organizations and
communities. With an entrepreneurial spirit, the Graziadio School
advances experiential learning in small classes that deepen connections
and stimulate critical thinking. Through our wide continuum of MBA, MS
and executive degree programs offered across six California campuses,
Graziadio faculty inspire full-time students and working professionals
to realize their greatest potential as values-centered, Best for the
World Leaders. Follow Pepperdine Graziadio on Facebook,
Twitter,
Instagram
and LinkedIn.

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