Survey Finds Trade Wars Do Not Rattle Business Owner Confidence
Rising Interest Rates Have a Negative Impact on Both Buyers and Sellers
By: New York Business Brokerage
"The industry as a whole is keeping a close eye on the tariff situation, but right now we do not see the trade wars impacting buyer confidence,"
On the other hand, rising interest rates are viewed as problematic with advisors predicting a negative impact on sellers (43 percent) and buyers (68 percent). Rising interest rates may spur activity in the short term as buyers are motivated to take on debt before financing becomes more expensive. As interest rates move up, purchase prices may be subdued, despite an otherwise strong market.
"With interest rate increases looming, buyers and sellers were motivated to accelerate the deal making process early this year. We may continue to see abbreviated timeframes in order to get ahead of additional increases," said Craig Everett, PhD, Director of the Pepperdine Private Capital Markets Project. "At the same time, a strong seller's sentiment in the lower middle market gives business owners and advisors the leverage they need to set timetables and keep the deal process moving forward."
Consistent with general market optimism, seller market sentiment is at an all-time high in four of five market sectors. Business in the $1 million to $2 million sector had the biggest jump in confidence, growing 14 percentage points. Despite the seller market advantage, the majority of Main Street business owners fail to plan for the sale of their business. Advisors indicated that half of businesses that went to market in the last quarter did not sell and that 88 percent of business owners in the less than $500,000 sector did not have a formal exit strategy.
About the Market Pulse Report
The Market Pulse Report compares conditions for businesses being sold on Main Street (values of $0 – $2 million) to those being sold in the Lower Middle Market (values of $2 million – $50 million). The Q1 2018 survey was completed by 271 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 (https://www.facebook.com/
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 (https://www.facebook.com/
About Pepperdine University Graziadio Business School
Anchored in the core values of integrity and innovation, the Pepperdine Graziadio Business School (https://bschool.pepperdine.edu/)
About New York Business Brokerage
New York Business Brokerage has been "leading the way" for entrepreneurs and small businesses since its founding in 2003. The firm provides mergers and acquisitions, business brokerage, exit planning, and commercial real estate services to clients through the U.S. The group is made up of the following entities: New York Business Brokerage (www.nybbinc.com)
Kyle Griffith, CBI
New York Business Brokerage