New this survey, advisors reported that 65 percent of their new sellers and 41 percent of
their buyers were baby boomers in first quarter 2014.
“The older boomers are selling and the younger boomers are buying,” said Scott Bushkie,
president of Cornerstone Business Services. “The boomers are affecting both sides of the
transaction, helping create more activity on top of the strong interest from corporations and
private equity to grow through acquisition. It’s easy to see why activity is at an all-time high for
the last five years.
“That said, the Main Street market remains a buyer’s market,” Bushkie continued. “It’s unlikely
values will increase as long as there’s a larger number of baby boomers selling than there are
buyers looking for Main Street opportunities. We’d need to see other market scenarios take
precedence for valuations to change.”
For Main Street, retirement was the number one reason driving sellers to market, followed by
burnout. Notably, in the lower middle market, the $5 million to $50 million sector showed
the greatest diversity of sale drivers we’ve seen since the survey began, with retirement, new
opportunities, and acquisition all tied at 20 percent, followed by family issues at 13 percent.
“The reason we’re seeing retirement share the spotlight with acquisitions and new opportunities
most likely stems from an increase in unsolicited bids,” said Michael Camerota, president of
Touchstone Advisors. “With the larger number of buyers and their record amounts of dry powder,
many buyers are getting more aggressive. They’re hiring M&A advisors or putting a deal
team in place to seek out proprietary deal flow and avoid competing in the competitive auction
process for a company that’s formally on the market.”
“As for health issues spiking in the $2 million to $5 million sector, that could be tied to a
number of older boomers who should have started selling around 2008 or 2009 but decided to
hold on through the Great Recession,” said Cress Diglio, with Transworld Business Advisors.
“We can expect that health issues could continue to pop up as a key driver until most of the
older boomers have exited the market.”
Source: International Business Brokers Association 2014