Market Pulse Q4 2024: Key Takeaways and What They Mean for Your Business Exit
By Bill West
Introduction
As 2024 draws to a close, the latest IBBA and M&A Source Market Pulse Survey for Q4 2024 brings a wealth of insights into deal activity and valuations—important knowledge for owners who might sell or transition in 2025. Below, I’ll walk through the highlights, correct a few data points, and offer perspective on how these findings might shape your business exit strategy.
1. Deal-Making Shows a Modest Uptick
Tighter Lending but More Offers: Despite 43% of advisors describing 2024’s lending environment as “more restrictive” than 2023’s, Q4 data reveals a modest increase in overall deal volume. Sellers, in many cases, are seeing multiple offers per deal and respectable amounts of cash at close.
Cautious Optimism for 2025: Advisors expect interest rate reductions, a more favorable political climate post-election, and increased M&A activity. That said, about a third of advisors remain concerned about new tariffs potentially dampening deals.
Key Point: Even in tighter credit conditions, solid businesses can command multiple offers. Expect 2025 to be more active—particularly if interest rates ease.
2. Valuations Holding Strong (or Better)
95% of Benchmark: On average, sellers across Main Street (<$2M) and Lower Middle Market ($2M–$50M) are receiving valuations at 95% (or more) of their asking price or confidential benchmark.
$5M–$50M Multiples on the Rise: Businesses in the $5M–$50M range are currently averaging a 6.0x EBITDA valuation—matching some of the best numbers since 2021. Bear in mind that average multiples can mask a wide range: some sellers in that bracket fetched as high as 8.25x, while others came in around 4.5x.
Key Point: Top-performing companies continue to command premium multiples, and even smaller businesses are meeting or exceeding their original benchmarks—good news for prospective sellers.
3. Buyer Activity: Individual Buyers and Strategics Lead
Main Street: First-time individual buyers (38%) and serial entrepreneurs (32%) together dominated Main Street deals in 2024—roughly 70% of all acquisitions. Strategic buyers took about 19%, while private equity firms made only a tiny fraction of very small deals (about 1%).
Lower Middle Market: Strategic buyers topped the charts at about 35%. Private equity—when you combine platform and add-on investments—seems closer to 33% in the chart. However, the text in the report references about 21% coming from PE overall in 2024. That discrepancy likely reflects different data slices (e.g., Q4 alone vs. full-year). Either way, individuals (first-time and serial entrepreneurs combined) still had a sizable share, at around 30–40%.
Key Point: In smaller businesses, you’ll mostly see individual buyers (many of them first-timers). For higher-value businesses, strategic acquirers and private equity both remain active, though Q4 data suggests strategics outpaced PE—possibly due to the high cost of debt right now.
4. Financing & Earnouts
Cash at Close ~84%: Sellers in Q4 2024 received, on average, 84% of total consideration at closing (via bank financing plus buyer equity).
Seller Financing ~15% or Less: The typical share of seller financing remains modest, partly because lending, although tight, is still available for good deals.
Earnouts Return to ~2%: After spiking up to around 10% of deal structure last year in the $5M–$50M bracket, earnouts have dropped back to roughly 2%. Advisors indicate this reflects a more balanced negotiation environment, with buyers increasingly willing to pay a higher portion of the price upfront.
Key Point: For a while, with rising interest rates, seller financing and earnouts became more common as a bridge. Now, as buyers expect rates to ease in 2025, we’re seeing earnouts revert to more typical (lower) levels.
5. Time to Close: Around 6–10 Months
Main Street: Expect around 6–9 months from listing to closing.
Lower Middle Market: Often in the 9–10 month range to get a deal finalized.
Due Diligence: A significant chunk of that timeframe (3–4 months) occurs after you’ve signed a letter of intent.
Key Point: These timeframes haven’t changed dramatically. If you’re targeting a 2025 close, start preparing now—the sale process can quickly stretch to nearly a year.
6. Retirement is #1 Driver, Yet Exit Planning is Rare
Retirement & Burnout: Across both Main Street and Lower Middle Market, the top reasons for selling remain retirement and burnout.
Minimal Advance Planning: The smaller the business, the less likely the owner is to do any formal exit prep. In the $5M–$50M range, the survey suggests no owner spent more than two years planning for their exit—despite the fact that it’s often a business owner’s largest financial transaction.
Key Point: Exit planning is one of the biggest levers for boosting valuation and avoiding unwelcome surprises. Even a year or two of pre-sale prep can significantly enhance your exit outcome.
7. Top Performing Sectors
Finally, here are the sectors that saw the highest transaction activity in 2024:
Main Street:
Restaurants
Personal Services (e.g., salons, gyms, childcare)
Consumer Goods/Retail
Business Services
Construction/Engineering
Lower Middle Market:
Construction/Engineering (#1)
Business Services
Manufacturing
Roll-ups and consolidation remain especially strong in construction, engineering, and manufacturing.
Looking to 2025: How to Position Your Business
Get a Formal Valuation: Knowing your market-based value is step one in deciding whether it’s time to sell.
Tidy Up Your Financials: Buyers (and lenders) still want reliable, transparent documentation—particularly in a conservative lending climate.
Plan Early for Retirement or Other Transitions: Time spent preparing can boost your multiple and reduce surprises.
Stay Alert to Economic & Policy Shifts: Potential interest rate cuts, new tariffs, or changes in the political environment can nudge valuations and buyer behavior in either direction.
Team Up with Professionals: An experienced M&A advisor or broker can help package your business, access the right buyer pool, and navigate negotiations.
My Risk-Free Valuation Offer
Wondering what your company might sell for right now? I’m offering a $2,500 Business Valuation, which includes:
A weighted, reconciled, market-based Most Probable Selling Price based on similar business sales in your industry.
Three-year historical financial performance comparison (normalized financials reporting adjusted EBITDA and SDE).
Full credit to sales commission if you list your business with me within 1 year of the original valuation.
Free annual revaluation for 3 years.
This helps you see precisely where you stand—and how you can improve before hitting the market.
About Bill West
I’m Bill West, a veteran USMC Combat Logistician and seasoned business intermediary with 30+ years in business valuation and transactions. My job is to help you achieve a smooth, profitable exit on time, done correctly, and with full confidentiality.
If you’re interested in discussing your exit plans or simply want more details on market conditions, call or email:
(772) 812-5530
Acquisition Experts LLC
50 SE Ocean Boulevard ◆ Stuart, Florida 34994
Final Thoughts
The Q4 2024 Market Pulse report makes it clear: even with tighter lending and tariff concerns, qualified sellers are finding solid deals. For those ready to transition in 2025, now is an excellent time to prepare. Let’s ensure your exit is a well-planned, value-maximizing milestone that rewards all the years you’ve invested in your company.
Source: IBBA & M&A Source Market Pulse Survey, Q4 2024.
Get your copy of the IBBA & M&A Source Market Pulse Survey, Q4 2024 Report here: