ETA relative supply and demand

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August 14, 2021

by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA

For those who have been involved in the space for a while, do you have a general sense of how the relative supply to market of and demand for companies sub-2M ebitda has evolved? Boomer retirements promised a massive wave of transitions, but it also seems like the community of searchers grows by the day. Is there just more activity overall but still in equilibrium or is there more pressure on one side or the other? Multiples paid over time may be a good indicator, but cost of capital should be controlled for.

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commentor profile
Reply by a searcher
from University of Fribourg in 40822 Mettmann, Deutschland
My experience from the German market is that especially for these smaller companies most transitions occur "unnoticed" where the business is handed over within the family or through an MBO. However, there is definitely some "downward pressure" from mid-market PE firms that are moving towards smaller companies and reducing their revenue/EBITDA minimums because the mid-market space has become too crowded to get sufficient dealflow. In line with Mark, I don't think searchers are hurting each other too often yet.
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Reply by an investor
from Georgetown University in New York, NY 10014, USA
a little dated, but I found the below to be a good a resource on the subject
https://www.guidantfinancial.com/small-business-trends/baby-boomer-business-trends/
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