Top insights from the IBBA Q4 report!

A little late, but today's thread covers some of my favorite quarterly data: the IBBA quarterly report. This is always an interesting source of information about the #smb #eta space. Here are my top 5 insights from the Q4 report, out earlier this month:

1) Brokers believed that high interest rates and access to capital constrained dealmaking in 2023, leading to a similar number of closings despite a marked increase in buyer inquiries. In 2024, brokers are hoping conditions will improve.

2) EBITDA multiples diverged notably across the industry, with the top 17% of deals closing above an 8.25x multiple (5-50M enterprise value) and the bottom 17% of deals closing at or below a 4x multiple. (notably, these multiples are higher than what we posted at Private Market Labs because they encompass more larger deals, with most of our deals being below $20M of enterprise value).

3) Broker confidence flattened out as the year came to a close (flat versus Q3). Confidence is also flat versus Q4 2022, though remains below the norm over the past decade

4) The survey revealed earnouts becoming more prevalent in the lower middle market, with usage jumping to 7% of $5-50 million deals in Q3 2023 and 10% in Q4. Buyers might offer a lower upfront price but include an earnout to increase the potential total payout if the company performs well.

5)Buyer types differed substantially between main street (up to $2M of EV) and lower middle market ($2-50M of EV) acquisitions.

If you'd like to see the full report (including charts), check out the IBBA website for more.

And don't miss additional insights from us at Private Market Labs. I'll be interviewing ^redacted‌ tomorrow at 3:00 about building community for #searchers, live on Searchfunder!