Q3 Update
Important Update:
I am representing a buyer in the toy / consumer product space that is divesting other assets and has up to $60 million to invest in a company(s) with at least $2 million in EBITDA. If you are interested in learning more please contact me immediately.
Selling a business is a significant milestone for any company/ entrepreneur. After dedicating so much time and effort to build a successful enterprise, it can be exciting to finally reap the financial rewards. With interest rates finally dropping, banks are anxious to lend, creating a robust M&A market.
BizBuySell’s Insight Data, which tracks and analyzes U.S. business-for-sale transactions and sentiment from business owners, buyers, and brokers notes small business confidence grew in the 3rd quarter as Q3 ’24 Sold Business Transactions Increased 5%. Some key takeaways:
- Most small business owners are confident in receiving an acceptable price if they were to sell
- Acquisitions were up 20% for manufacturing businesses
- Interest rates are not slowing deal flow
Katrina Loftin, managing partner and co-founder at M&A Business Advisors noted how sellers and lenders are motivating buyers to move forward with deals, “ We are seeing more buyers asking for seller financing. Many banks have been offering incentives, so that has kept things moving.”
I also note that “the market has observed more sellers entering the market in Q3, and some are adjusting their pricing to reflect the realities of financing costs. Rather than holding off, many are motivated to close deals before any potential market shifts. While interest rates are a factor, they’re not halting transactions. Buyers and sellers are adjusting to the new normal, and deals continue to close when the financials make sense.”
Factors that can help get deals closed include:
- Valuing unique IP
- Utilization of Seller Notes
- Earnouts
- Seller Notes with the Right to Offset
- Offer a Premium Interest Rate Above Market on a Seller Note
- Keeping key seller’s key personnel onboard as part of the transaction.
Demand for manufacturing businesses was exceptionally strong in Q3, with closed transactions up 20% year-over-year. Sale prices remained unchanged, with also modest changes in financial performance. Median revenue remained flat year-over-year while median cash flow grew 2%, respectively. Popular among these were manufacturers of consumer goods (including toys), printing, concrete, and signage.
The combination of these factors indicates this is a very good time to consider an exit or strategic investment / alignment with a complimentary partner.
Steve Velte is a licensed M&A broker specializing in the Toy & Game industry. He has sold companies such as Shrinky Dinks, Maranda Games, The Young Scientists Club, Hanz Toys, CitiBlocs, Forbidden Games and many others. Steve also previously represented Hasbro’s Avalon Hills Suite of games for sale and he has also been an investment advisor on other recent sales including WeCool. For a confidential discussion, Steve can be reached at: Ph: 813/416-9684 steve@globaloyexperts.com
Solid Article and Industry Update Steve! Keep ’em coming!