The International Business Brokers Association (IBBA) and M&A Source released their Market Pulse Survey for the second quarter in 2020. This second quarter survey offers insight into the market conditions for businesses being sold in the $0-$50MM range and specifically Covid-19’s impact on the transaction market. Although this survey focuses on the market conditions in the United States for businesses being sold, it translates to the Canadian Market. View or download the full report here. All chart images and information below are credited to the Market Pulse Q2 2020 Report.

Report Highlights

Shaken Markets Result in Delayed Deals

Nearly 40% of all deals were delayed in Q2. The leading source of these delays was attributed to buyers for all businesses in the $0-$50MM range. Advisors surveyed predict that the market will not rebound to pre-pandemic levels until Q1 or Q2 2021.

Trending towards normal operations

Nearly half of businesses were operating at normal capacity in Q2. These conditions are anticipated to continue to improve as we move further along in 2020.

Seller Market Sentiment Hits Record Lows

After record highs in seller market sentiments in 2018 and 2019, this year’s sentiment took a nosedive reaching new lows across all market segments. There is a lot of uncertainty right now which is contributing to this negative bias. Comfort levels should increase as companies settle into the new normal.

Business Values

The overall transaction market environment remains competitive despite economic conditions. Q2 median final selling prices came in at 89% to 100% of the pre-set asking price. There are fewer active buyers in the market, however, this corresponds with the 50-70% decrease in the number of potential deals circulating. Favorable opportunities still exist for well-positioned companies.

Multiples March On

Median Multiples Paid remained strong through Q2 2020 overall, except for the smallest sector of businesses valued below $500K. These businesses dipped below the 2.0 mark for the first time in survey history.