An accurate business valuation matters. Burgeoning Enterprises has worked with many lending institutions over the years. We have built relationships with over 40 of these organizations that we communicate with regularly. We are getting a mixed bag of answers after speaking with many of the lenders since December of 2023.
Roughly half of the lenders we have spoken with discuss the Covid Spike or Post Covid spike in Values. Lenders feel like Multiples of EBITDA are in a corrective phase and dropping slightly. Others feel that correction has come and gone. However, they believe higher interest rates mean more expensive money. This can translate into valuations being down slightly as well.
A third group of lenders sees values as having corrected some and believes Valuations will remain even relative to 2023.
Bullish Lenders
And finally, there is a group of lenders who are decidedly more bullish. These lenders see Valuations going up. This prediction could be based on thinking there will be a change in the current power structure and administration in Washington.
There are many buyers that remain bullish despite many challenges facing the country today. Our opinion: buyers have a significant say in determining the value of companies (simply by what they are Willing to ultimately pay). This is undoubtedly a complicated question to answer that includes so many factors.
- Your business’ industry
- Your business’ growth
- Is there recurring revenue in the business model?
- Are Private Equity and Family Office Buyers are present and buying in your industry?
- Has management planning within the business occurred?
- Buyers want to see a plan encompassing experienced leaders that will continue to lead the business through a myriad of industry and macro-economic factors.
Business Valuations Are Holding Steady
We have not seen a big decrease in business valuations, nor have we seen large increases in the middle markets. It’s roughly equivalent to what we saw in 2023 to date. There is a lot of capital chasing deals. This could significantly benefit sellers in 2024. For business owners with up to $60 Million in Sales Revenue (which is our wheelhouse), we believe M&A activity will continue to increase not decrease. This is driven by the volume of capital that is on the sidelines looking for deals to close this year, along with the aging ownership of the businesses in the mid-markets.
Get a Proper Business Valuation Today
Whether you are Exit Curious or Exit Planning, getting a business valuation is an important step to understanding clearly where you are. It’s good business to know where buyers in the market value your specific business today. It is helpful for potential future capital allocation, Exit Planning, Wealth Management and Estate Planning as well.
Are you exploring a strategic exit, wanting to get up to speed on the current M&A Environment, or looking to secure a Valuation? Reach out and have a conversation with one of the Middle Market M&A Industry’s most respected Sell Side Advisors. Byron David Burge can be reached by phone at 1 (502) 208-8682 and via email at Byron@BurgeoningEnterprises.com.
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