The years-long hot market for businesses may begin to cool, perhaps as soon as this year. That’s the finding of a survey of brokers and advisers who help owners and buyers complete sales of small and mid-size businesses.
Conducted by researchers at Pepperdine University’s Graziadio School of Business and two industry groups, the survey questioned 319 business brokers and mergers and acquisitions advisers.
Eighty-three percent of the survey participants said the strong mergers and acquisitions market will be over within two years. Nearly a third of the participants were more pessimistic, saying it wouldn’t last through 2019.
The problem is the economy. Participants said they were concerned that overall business conditions will decline, putting pressure on companies’ profits and making them less desirable to buyers.
The survey’s findings are partly in line with one released last month by BizBuySell.com, an online market place for businesses. That survey also forecast that the market for small businesses would remain strong this year. However, it did not question business brokers about their outlook beyond 2019.
The Pepperdine survey found, as the BizBuySell.com survey did, that retirement is still the primary reason why businesses are going on the block. The Pepperdine survey, which broke sales down according to company size, found that 80% of owners of companies priced in the $1 million to $2 million range were heading for retirement. Read the full story.