Are you considering buying or selling a privately held business? Below are a few stats that you might find surprising:
- Majority of a business owner’s wealth is tied up in their business. Typically, about 90% of a business owner’s wealth is in their business. Talk about having your investment portfolio out of whack!
- It is rare for your business to continue on through the various generations. Only about 30% of family-owned businesses survive the second generation, about 12% survive the third generation, and about 3% survive the fourth generation. Often times a business is the owner’s legacy. Make sure it is in good hands upon your exit.
- Over 50% of business owners will try to sell the business themselves. However, with juggling the operations and trying to learn the sell process with their largest investment, many fail.
- As of January 2019, accordingly to NYU Stern, the average EBITDA multiple on 6,004 companies that they have collected deal information on, the total market is 11.31X. Keep in mind that this is based on publicly traded companies, but M&A experts within the private market are seeing very high multiples in the private market as well.
- Based on a Forbes survey of 200 San Diego business owners, 53% of business owners have not thought through a transition plan even through 2/3 of the participants were over 51 years old.
- 70% of business owners that participated in the Forbes survey mentioned above, do not know what amount of after-tax income they need to support their lifestyle. A good wealth manager can help uncover this answer.
- According to a PWC survey, family-owned businesses that plan to have an ownership change to the next generation within the next five years is at the smallest share since 2010. This transition method has decreased about 25%.
- 50% of agreed deals never close due to the deal not being able to get through the due diligence stage. A seasoned M&A firm can help increase a business owner’s odds of selling or buying a business. The firm will be able to help navigate the intense due diligence process.
- At any given time, there tends to be 15 prospective buyers for every one business listed in the open market.
Hiring professionals that are experienced with the complexities that come along with M&A deals, can help ensure that you find the perfect business you are seeking or achieve your desired goals through the sale of your business. Key professionals include an experienced M&A team that consist of an M&A advisor, M&A attorney, knowledgeable tax advisor, and wealth manager. If you are buying a business, having experienced due diligence providers will be key.
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Call Benchmark International today if you are interested in an exit or growth strategy or if you are interested in acquiring.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkCorporate.com
Europe: Carl Settle at +44 (0)161 359 4400 / Settle@BenchmarkCorporate.com
Africa: Anthony McCardle at +2721 300 2055 / McCardle@BenchmarkCorporate.com
ABOUT BENCHMARK INTERNATIONAL
Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $6B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 12 offices across the world, have assisted hundreds of owners with achieving their personal objectives and ensuring the continued growth of their businesses.