Interest in selling a business has grown 2.6x since 2020, while buyside queries have remained flat.
The good news for sellers is that buyer interest still outstrips seller interest 11:1, keeping the market competitive.
But who are the typical buyers of Main Street businesses?
There are 3 broad categories:
1. Strategic Acquirers
These can be local competitors looking to grow inorganically, regional businesses entering a new market, or vertical acquirers in search of integration (e.g. a tile manufacturer acquiring a local fabricator).
2. Individual Entrepreneurs
Over 56% of current business buyers have never previously owned a business. Many of these individuals are ‘corporate refugees’ or recently unemployed professionals. Serial entrepreneurs also represent a meaningful group in this category.
3. Search Investors
While private equity and other institutional investors have historically avoided Main Street, there is a small-but-growing hybrid class of buyer in the space: the ‘searcher’. Searchers are individuals who raise institutional capital to acquire, operate, and grow a single business over 5-10 years.
For Main Street owners: it’s helpful to understand who’s sitting on the other side of the table. Knowing how to best position your business can have a meaningful impact on your exit outcome.