Earlier this week, the International Business Brokers Association and M&A Source sent out a press release highlighting the results of a survey covering the 1st quarter of 2022. Not surprisingly, the impact of the many factors in the market (inflation, labor shortages and supply chain) are starting to show their effects on the main street and lower middle market transaction activity. below is the full release
National Report: Market Headwinds: Labor Shortages, Supply Chain
Independence, OH – May 24, 2022 – According to the Q1 2022 Market Pulse Report published by the International Business Brokers Association (IBBA) and M&A Source, business intermediaries representing businesses valued at less than $50 million suggest that the lower M&A market faced headwinds over the last several months as global conflict and rising inflation may have caused some buyers to reevaluate their deal strategy. Talent and supply chain issues remain persistent concerns.
Sixty-eight percent (68%) of advisors say that labor shortages have had the biggest effect on Main Street and lower middle market M&A in Q1 2022.
More than half of advisors (58%) say supply chain issues are having a negative impact on the market. One quarter indicated that interest rates and inflation are having a negative impact on business transitions while 15% say the Russia-Ukraine conflict has hurt deal activity.
“Global conflict, supply chain, talent issues, and increasing inflation will present challenges for many companies,” said Jeff Swiggett, President of VR Business Sales Mergers & Acquisitions. “And yet there are plenty of compelling reasons for sellers to stay positive. Between private equity fundraising and the excess cash on corporate balance sheets, valuations should stay strong for the year ahead.”
One quarter of advisors believe a recession is either “very likely” or “extremely likely” in the next 12 months, with another 51% suggesting a recession is “somewhat likely.” On the flip side, 12% suggested that a recession was “not at all likely” or “not very likely” with another12% stating it was “somewhat unlikely.”
About the Market Pulse Report
The Market Pulse Report compares conditions for businesses being sold on Main Street (values of $0-$2MM) to those being sold on the Lower Middle Market (values of $2MM-$50MM). The Q1 2022 survey was conducted April 1-15, 2022 and was completed by 360 business brokers and M&A advisors. Respondents completed 317 transactions this quarter. This is the 40th edition – marking 10 years of the Market Pulse Survey.
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, Twitter and LinkedIn.
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, LinkedIn and Twitter.