Market Pulse Q1 2018

IBBA Q1 2018 MarketPulse


Confidence Strong in Early 2018

Advisors continue to be bullish on a strong M&A market for 2018. In the Main Street and lower middle markets, 86% of advisors said business owner confidence was as good (25%) or better (61%) than a year ago.

Advisors are optimistic about deal flow,  with all sectors predicting an uptick in new client engagements. With a solid market and multiples at or near peak, advisors predict only slight room for value increases in the months ahead.

Optimism persists despite economic and political concerns around tariffs and interest rates. The majority of advisors believe that tariffs will have no impact on buyers (56%) and sellers  (60%). Meanwhile, rising interest rates are viewed as relatively problematic, with advisors predicting a negative impact on sellers (43%) and buyers (68%). Rising interest rates may spur  activity in the short-term, as buyers are motivated to take on debt before financing becomes more expensive. As interest rates move up, purchase prices may be subdued, despite an  otherwise strong market. “The industry as a whole is keeping a close eye on the tariff situation. For now, it may be too soon to predict the impact on M&A”, said Mike Camerota, JD,  M&AMI, CM&AP, Founder of Touchstone Advisors, M&A Source Chair. “We expect better clarity as buyers and sellers reconcile tariffs with business costs. Many businesses are taking a  ‘wait and see’ approach as current economic growth could make an increase in raw material pricing more tolerable.”