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Lenders are more reluctant to finance larger transactions right now. That’s a factor of risk and declining economic confidence. Financing has generally been easier for the smaller deals, which is why we’re seeing more buyers move down market. The larger the deal, the more likely a buyer is going to need alternative financing options in order to bridge any valuation gaps.
When interest rates increase, valuations typically come down because buyers are not apt to accept lower returns. Seller confidence is a measure of being a good time to sell on terms favorable for sellers. It has slipped significantly since Q2 2021 and is now on par with 2012 levels when we were emerging from the Great Recession.
These and other market observations are part of the findings of the Q2 2023 MarketPulse Survey produced by International Business Brokers Association (IBBA) and the M&A Source. If you would like a copy, email me at lee@bizreadyinc.com.
Lee Sheaffer, CBI
BizReady, Inc.
Certified Business Intermediary
CA DRE #01987910 (firm) and #00689023 (broker)
Founded in 1991, the M&A Source promotes professional development of merger and acquisition professionals so that they may better serve their clients’ needs and maximize public awareness of professional intermediary services available for middle market merger and acquisition transactions. For more information visit www.masource.org or follow the M&A Source on Facebook, LinkedIn and Twitter.