The Main Street market is rarely affected by the larger deal making environment. For example, over the last 40+ Market Pulse surveys, the median multiple for businesses valued under $500,000 hasn’t shifted beyond 2.0X to 2.3X.
However, we’re seeing a resurgence in value in the $5 million+ sector. It’s worth noting that the Q3 2021 multiple of 6.8 in this sector represented an all-time high in the 10-year history of the Market Pulse Report. Now, with a median EBITDA multiple of 6.5 in Q3 2023, we may be seeing a return to an M&A bull market.
Overall, businesses received 92% of the selling price or internal benchmark set before going to market. Businesses in the $5 million+ sector tend to outperform benchmark.
Even though retirement is far and away the biggest reason sellers go to market, most business owners are doing little to no exit planning. The smaller the business, the less likely owners are to plan. Of those owners who did plan, most started less than a year before putting their business on the market.
Median time to close remains somewhat consistent year-over-year, with businesses generally selling within one year of a listing engagement. Main Street deals typically close faster due to reduced due diligence demands.