If you’re involved in deal-making professionally, chances are you’ve encountered search funds and fundless sponsors frequently this year. Although they were virtually unknown (or incognito) just a few years ago, fundless models seem to be cropping up in deal competition everywhere. Multiple factors have contributed to their popularity and competitive position in lower middle market acquisitions.
“Main Street” businesses are the large group bridging the gap between small business and the corporate world — earning roughly $2 million to $30 million in revenue and resulting in between $500,000 and $5 million in earnings before interest, taxes, depreciation, and amortization. With such a wide range of numbers, it’s crucial to understand your market position as you prepare to sell your Main Street business.
The International Business Broker Association (IBBA) and M&A Source present the Market Pulse Quarterly Survey Report in partnership with ongoing research conducting by the Pepperdine Private Capital Markets Project at Pepperdine University’s Graziadio School of Business and Management. The national quarterly Market Pulse survey was created to gain an accurate understanding of the market conditions for businesses being sold in the Main Street market (values $0 to $2 million) and lower middle market (values $2 million to $50 million). The survey was conducted with the intent of providing a valuable resource to business owners, potential purchasers, and their advisors.
Over 3,000 small and mid-size business owners responded to a 25-question survey about expectations, projections and operations in 2014.
Presented by the Pepperdine Private Capital Markets Project.
This year’s Chase Business Leaders Outlook survey included executives from two groups: small business leaders with annual sales between $100,000 and $20 million, and middle market business leaders with annual sales between $20 million and $500 million. Surveying both audiences for the second year in a row provides a holistic view of the opportunities, challenges and trends facing a wide range of American businesses—and provides insight into how their outlooks compare to one another based on size and strategic goals, and how they differ from 2013.
In broad terms, middle market business leaders appear to be more optimistic about the national economy, their local economies and their own company’s performance than small business leaders. However, respondents from mid-sized businesses are more concerned than ones from small businesses about regulations and labor issues, and appear to have higher expectations for revenue and sales growth for the coming year. Small businesses are less concerned about government fiscal policy than middle market businesses but are more concerned about payroll and employment taxes.
Presented by JPMorgan Chase & Co.
When people think about small businesses, they often think about those in what is known as the lower middle market. These businesses typically do more than $5 million a year in sales, and they often have more than 25 employees. It’s good work if you can get it. For one thing, if your business is in this group, you are likely to get regular offers from people who are interested in buying your company. But a lot of people don’t realize how tough it is to get there.
Richard S. Ruback of Harvard Business School and ABRY Partners provides an in-depth report on the Lower Middle Market. Published in April of 2012.