Q1 2024 IBA Activity Update

Feb 20, 2024

The calendar year 2024 started approximately seven weeks ago.  The year of the Wood Dragon started February 10, 2024, according to the Chinese Lunar calendar. The Year of the Dragon (https://www.smithsonianmag.com/history/why-is-the-year-of-the-dragon-considered-so-lucky-180983764/) according to Chinese astrology is about action, dynamism, and taking concrete steps to manifest the reality we want for our lives.  I am not an expert on tarot cards, astrology based forecasts, or reading tea leaves.   I can tell you that based on what I am seeing and have witnessed during the last six months in the business brokerage marketplace, that all the components are in place for the current year to be one of the most dynamic transactionally I have experienced during my thirty years as a mergers & acquisitions intermediary.  The following are five of the reasons why I believe the ingredients are in place for a strong year of dealmaking:

  1. The Baby Boomer Generation, born between 1946 – 1964, is not getting younger. The elder edge of this group turns 78 in 2024, the younger edge 60.  A component of this large segment of the United States population lived the American entrepreneurial dream of owning privately held companies that provided professional fulfillment and financial prosperity.  They are ready to lay down their last winning hand (The sale of their business) and cash out their chips on the table to pursue activities like being grandparents, traveling, and getting involved in philanthropic pursuits.  A large number of business brokers will be needed to facilitate these business transfers with knowledge, experience, and skill employing best practices. Everyone in the industry should have an abundance mentality and do their part to raise the level of performance in the representation of business owners.
  2. Interest rates should be lower at the end of 2024 than they are today.  It is anticipated that the Federal Reserve will cut the interest rates by over 1% in 2024 (https://www.forbes.com/sites/simonmoore/2024/02/12/what-to-expect-from-the-feds-remaining-meetings-of-2024/).  This information means the deployment of capital for acquisitions, an expense whose sourcing if it involves interest is tax deductible, is only going to get cheaper.  That means that businesses bought with current interest rate financing will become more profitable acquisitions when variable interest rates adjust naturally with each successive cut in the interest rate by the Federal Reserve in 2024 & 2025.
  3. There is over $6 trillion in capital on the sidelines looking for the right investment for deployment (https://www.cnbc.com/video/2024/02/16/6-trillion-in-cash-on-the-sidelines-will-come-into-play-this-year-payne-capitals-courtney-garcia.html).
  4. Entrepreneurship has never been a more attractive career path in American history. In 2023, there were over 5.5 million new business license applications (https://www.uschamber.com/small-business/new-business-applications-a-state-by-state-view) each of these applications was based on either a start-up company being created or an existing business being acquired.
  5. It is commonly recognized by the population that business owners are wealthier than employees in America (https://advocacy.sba.gov/2021/08/17/small-business-facts-the-importance-of-business-ownership-to-wealth/) creating a business ownership objective in a large segment of the population.

As we enter the new year and the prior year is placed into the historical record, it is my pleasure to report as the President & CEO of IBA, a position I have now held for over 24 years, that transactional activity facilitated by the firm’s nineteen professional M&A intermediaries was very strong at IBA in 2023 and that the company successfully completed four transactions in January 2024.

Completed transactions by IBA’s knowledgeable, experienced, highly skilled business brokerage team working out of our seven offices in Washington & Oregon in the last 100 days has included sales in a broad range of sectors of the economy and geographic locations.  The transactions have included community favorite companies in large cities and small Pacific Northwest towns including retail businesses such as Country Corner Grocery & Deli (https://www.facebook.com/countrycornergrocery/) on Orcas Island, Cinnamon Twisp Bakery (https://www.cinnamontwispbakery.com/) & Crow’s Feet (https://crowsfeetbend.com/) in Bend; service companies ranging from online educational platforms supporting school districts and individual students (https://www.emathinstruction.com/) to multiple location pet care facilities (https://www.jaxdogdrop.com/) and a vegetation management provider to government entities  (https://aklinvm.com/) to a nearly 80 year iconic Seattle plumber (https://soreanosplumbing.com/); and industrial/construction niche businesses including Ertell Electric (https://www.procore.com/network/p/ertell-electric-llc-hillsboro), E2 Solar (https://e2solar.com/), Tobin Electric (https://www.facebook.com/p/Tobin-Electric-100054230811897/), and New Way Leasing (https://newwayleasingandrentals.com/).  More successfully completed transactions could be listed, but the sample set provided convey a satisfactory reference point on the broad spectrum of deal flow through our offices.

Companies in escrow pending sale presently include a cannabis dispensary chain, a building information modeling professional service firm working on projects in the semiconductor manufacturing and healthcare spaces, a specialty home improvement remodeling company, a technology infrastructure installation & maintenance business, a transportation equipment parts retailer, and an electrical contractor.

New acquisition opportunities either on the market presently or in our pipeline preparing to enter the market are too numerous to list in this space.   In Q1 & Q2 of the year, IBA traditionally builds its largest inventory of privately held companies and family owned businesses available for sale annually.  This occurs because the best time to price a company to market it for sale; have it assessed by buyers; or seek financing for an acquisition is after the most recent tax return has been filed.

If you are looking to sell a privately held company or family business in 2024, now is the time to start preparation for that sale.  IBA traditionally sells businesses in three to nine months from first bringing them to market.  All information shared with IBA is held in strict confidence and no fees are payable to IBA unless we perform and complete the sale.  IBA has market leading experience & knowledge across a spectrum of industries (https://ibainc.com/industries-served/) and a regional set of offices with five on the I-5 corridor between Bellingham and Portland and two east of the Cascades in Spokane, Washington and Bend, Oregon allowing for in person, confidential meetings in close proximity to most entrepreneurs.  Our team of professional M&A intermediaries, approximately 20 in size, are also happy to travel to you for a meeting whether you are located in Forks, Walla Walla, Tillamook, or Ashland (All places where IBA has represented businesses for sale).

We also, through our franchise brokerage division (https://ibainc.com/what-we-do/franchise-sales/), have the ability to sell new franchised business opportunities anywhere in the United States.  If an exit from working for “the man” in the corporate world and the start of a career as an entrepreneur through the purchase of an established business or new franchise is a 2024 goal, we would welcome the opportunity to support making that dream a reality.

Significant dealmaking is happening weekly at IBA involving the sale and purchase of privately held companies, family businesses, franchises, and commercial real estate. If you are looking to purchase a business, it is recommended you participate in our Buyer Database Program.  A significant percentage of sales facilitated by IBA sell to parties in this program without significant time in the public domain.  Participation in IBA’s Buyer Database Program can be facilitated by completing the forms available through DocuSign on this page of our website:  https://ibainc.com/buy-a-business/

If you are thinking of selling a business in 2024, we recommend interviewing multiple brokers before selecting one to sell your business.  We humbly ask to be included in that interview process.  If we cannot demonstrate why we are the best choice for representation, then IBA is likely not the best choice.  Five characteristics possessed by IBA worthy of note include the fact we are commonly recognized as market leaders in the industry in terms of knowledge, experience, & skill; we only represent the seller side of transactions; every broker on our team holds one or more state real estate licenses and has the ability to sell or lease real estate as a component of a comprehensive representation package; 100% of our compensation is contingent on completion of a project; and all conversations with IBA are held in strict confidence.

IBA’s 2024 slogan is “Embrace the Possible”.  This saying applies whether you are thinking of retiring and selling your company or acquiring a business or franchise.  A Wood Dragon year comes around every 60 years.  In 1964 the last year of the Wood Dragon, iconic Pacific Northwest company Nike was born by Phil Knight.  Paraphrasing that legendary entrepreneur, I say “2024 is the year to Just Do It”.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.