General

Multiples remained consistent across the Main Street market. Meanwhile, advisors reported a meaningful increase in multiples (up a half percentage point or better, year over year) in the Lower Middle Market.

On average, sellers are receiving valuations at 85% of benchmark or better. As is the trend,businesses in the Lower Middle Market performed the best, receiving all or nearly the privatebenchmark they set with their advisors before going to market.

Multiples remained relatively consistent across market sectors, with one notable exception. Advisors reported that businesses with enterprise value of $5M-$50M received an average valuation of 5.3x EBITDA, a meaningful jump over last year, but still down from the red hot market in Q4 2021.

On average, sellers are receiving valuations at 86% of benchmark or better. As is the trend, businesses in the lower middle market performed the best, receiving nearly all or above the private benchmark they set with their advisors before going to market.

“It’s difficult to say how election cycles impact M&A, as political policies don’t operate in a vacuum,” said Scott Bushkie, President of Cornerstone Business Services. “However, business owners generally expect a Democrat-led government will raise taxes. If the winds appear to be blowing that way, we could see more sellers… Read More »What will increase M&A Activity in 2024?

The lending environment is critical. If these dynamics shift, we hope to see lenders get a bit more flexible and increase their appetite for risk.