Professional Documents
Culture Documents
Business Brokers Industry Report
Business Brokers Industry Report
Business Brokers Industry Report
WWW.IBISWORLD.COM
Edward Rivera
16 International Trade
Industry Definition
17 Business Locations
Main Activities
Similar Industries
19 Competitive Landscape
29 Industry Data
Additional Resources
29 Annual Change
29 Key Ratios
3 Industry at a Glance
28 Industry Assistance
29 Key Statistics
4 Industry Performance
21 Barriers to Entry
Executive Summary
22 Industry Globalization
Current Performance
23 Major Companies
Industry Outlook
24 Sunbelt
26 Operating Conditions
12 Supply Chains
26 Capital Intensity
13 Demand Determinants
27 Revenue Volatility
14 Major Markets
WWW.IBISWORLD.COM
Main Activities
Similar Industries
Additional Resources
WWW.IBISWORLD.COM
Industry at a Glance
Business Brokers in 2015
Key Statistics
Snapshot
Revenue
Profit
Wages
Businesses
3.0%
$1.0bn
$374.5m 2,184
$79.5m
Number of businesses
% change
Murphy Business
& Financial Corp.
5.8%
Sunbelt
4.6%
% change
Market Share
-3
-6
-12
0
-1
-2
-9
Year 07
1.9%
09
11
Revenue
13
15
17
19
21
-3
Year
08
10
12
14
16
18
20
Employment
SOURCE: WWW.IBISWORLD.COM
p. 23
10%
Advertising
Number of businesses
Access to credit
20%
Number of adults
aged 65 and older
Other services
45%
Valuation
25%
p. 4
Due diligence
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Industry Structure
Mature
Regulation Level
Medium
Revenue Volatility
Low
Technology Change
Low
Capital Intensity
Low
Barriers to Entry
Low
Industry Assistance
Low
Industry Globalization
Low
Concentration Level
Low
Competition Level
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 29
Medium
WWW.IBISWORLD.COM
Industry Performance
In
Number of businesses
Industry operators earn the majority of
their commissions from the successful
sale of small businesses. While business
brokers are only involved in 10.0% of
these transactions, a growing number of
domestic businesses are beneficial to the
industry as it increases the potential
client base for industry operators. The
WWW.IBISWORLD.COM
Industry Performance
Number of businesses
2
12
% change
% change
-1
-2
-3
Year
0
-4
08
10
12
14
16
18
20
-8
Year
08
10
12
14
16
18
20
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Industry structure
Industry revenue
6
3
% change
Current
Performance
0
-3
-6
-9
-12
Year 07
09
11
13
15
17
19
21
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
Recent trends
In
WWW.IBISWORLD.COM
Industry Performance
Industry
Outlook
Macroeconomic
environment and
demographic shifts
The
number of domestic
businesses is forecast to
increase
average annual rate of 3.4% from 2015 to
2020, benefiting industry revenue as a
result. According to BizBuySell, the
challenging corporate environment faced
during and subsequent to the recession
tempered business transactions in recent
years. Consequently, there is a substantial
and growing volume of business owners
nearing or past the traditional retirement
age that are now interested in selling their
businesses. Swelling downstream demand is
anticipated to attract new entrants to the
Business Brokers industry; consequently,
the number of industry enterprises is
forecast to increase at an annualized rate of
1.0% to 2,293 companies from 2015 to
2020. Similarly, industry employment is
anticipated to rise at an annualized rate of
1.5% over the same period, reaching 4,007
individuals in 2020.
WWW.IBISWORLD.COM
Industry Performance
Regulatory landscape
The
WWW.IBISWORLD.COM
Industry Performance
Life Cycle Stage
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
15
10
Quantity Growth
Convenience Stores
Business Brokers
Computer Stores
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
WWW.IBISWORLD.COM
Industry Performance
industry
is M
ature
WWW.IBISWORLD.COM
Supply Chain
72211b
81211
81232
44312
45321
53112
10%
Advertising
20%
Other services
45%
Valuation
25%
Total $1.0bn
Due diligence
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Demand
Determinants
Due diligence
After finding prospective buyers, business
brokers must conduct due diligence on the
buyers to make sure they are a good fit for
the business. Additionally, brokers
conduct due diligence on a business in
order to provide accurate information to
prospective buyers. Acting as the
middleman in these transactions,
performing due diligence and offering
both sellers and prospective buyers with
accurate information is crucial to
successfully close deals. In 2015, this
service is expected to account for 25.0% of
industry revenue.
Advertising
Business brokers advertise businesses
on their websites and through other
channels to find potential buyers.
While independent business owners
can undertake this task on their own,
brokers often have access to extensive
advertising networks and use a
targeted advertising approach to
attract the best prospects. The growing
use of internet advertisements and
websites has helped reduce advertising
expenses for brokers. Consequently,
this segment is anticipated to account
for only 10.0% of industry revenue in
2015.
Other services
Business brokers also help business
owners and buyers coordinate
negotiations and close sales
transactions. Depending on the sale
value, the time to close a deal can take
anywhere between three to six months
on average. After valuing a business,
advertising that business and finding
prospective buyers, brokers must
coordinate with accountants, lawyers
and banks to complete the deal.
IBISWorld estimates this service to
constitute 20.0% of industry revenue
in 2015.
WWW.IBISWORLD.COM
Demand
Determinants
continued
Major Markets
11.8%
Restaurants
33.4%
12.6%
Retail
Manufacturing
18.4%
Other
Total $1.0bn
Industry firms can be segmented into two
categories: generalists and specialists.
Generalists administer the sale and
purchase of a variety of businesses,
whereas specialists operate in one
specific industry or sector. For instance,
there are many brokers that target the
restaurant industry by helping owners
estimate the value of their enterprise,
coordinate negotiations and supervise
the closing of a deal.
Retail
Retail businesses represent the largest
downstream market segment for business
brokers, accounting for an estimated
33.4% of the market in 2015. This
segment includes a variety of retail stores
including clothing stores, drug stores,
liquor shops and flower shops, among
23.8%
Service
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Major Markets
continued
WWW.IBISWORLD.COM
International Trade
WWW.IBISWORLD.COM
West
New
England
AK
0.3
Great
Lakes
WA
ND
MT
2.4
Rocky
Mountains
ID
OR
1.3
West NV
1.1
3.3
SD
0.2
WY
0.7
MN
0.2
0.3
Plains
CO
1.5
KY
0.6
OK
1.1
NC
2.2
TN
AZ
NM
2.6
0.6
Southwest
TX
6.6
HI
0.3
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.1
0.5
0.2
3.0
2.9
0.3
SC
Southeast
0.4
MS
AL
0.6
1.2
GA
2.8
0.4
LA
2.4
FL
11.1
Establishments (%)
0.2
1.6
AR
0.1
0.8
12.1
WV VA
4.1
0.7
1.2
CA
West
1.7
MO
KS
2.5
OH
1.0
5.3
3.7
IN
IL
0.3
UT
PA
3.2
0.5
0.3
1 2
3
NY
7.3
5 4
MI
1.2
IA
NE
0.4
WI
ME
MidAtlantic
9 DC
0.4
Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
20
10
Southwest
Southeast
Plains
New England
Rocky Mountains
Establishments
Mid-Atlantic
Great Lakes
0
West
Business Locations
Population
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
19
Competitive Landscape
in
this industry is L ow
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
Profit
Industry profit, defined as earnings
before interest and taxes, is expected to
increase during the five years to 2015,
rising from 6.4% of revenue in 2010 to
7.8% in 2015. While the industrys
commission structure has remained
relatively constant over the five-year
period, declining wages and shortening
transaction periods have benefited the
industrys profitability in recent years.
Tempered downstream demand forced
enterprises in the industry to cut
employee labor costs sharply in the
first-half of the period, causing wages to
ultimately grow at an annualized rate of
just 0.6% from 2010 to 2015.
WWW.IBISWORLD.COM
20
Competitive Landscape
Wages
Salaries, commissions and benefits
combine to account for the largest cost
category for business brokers. However,
wages have declined sharply as a share of
revenue over the five-year period, falling
from 41.4% of industry revenue in 2010 to
an estimated 36.8% in 2015. As mentioned,
enterprises in the industry cut salaries and
commissions during the recession as a
means to counteract the poor
macroeconomic landscape. However, given
that an estimated 40.0% of industry
enterprises are nonemployers,
commissions as a share of industry revenue
are expected to remain high and continue
to dominate industry costs over the five
years to 2020.
Rent and utilities
In 2015, rent and utilities are anticipated to
account for 8.3% of total industry revenue.
As a method to attract new clients, business
80
Percentage of revenue
Cost Structure
Benchmarks
continued
Industry Costs
(2015)
12.5
7.8
27.1
36.8
14.1
4.9
2.8
8.3
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
60
40
20
1.9
3.1
39.2
2.1
1.5
37.9
0
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
21
Competitive Landscape
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Mediumand the
trend is I ncreasing
Barriers to Entry
Level & Trend
arriers to Entry
B
Internal competition
Industry participants compete based on a
number of factors including area of
expertise, roster of closed deals and fees
charged. Many brokers serve a limited
geographic area and therefore only
compete directly with brokers in the
same city or state. However, national
brokers, such as Sunbelt Network and
Murphy Business and Financial
Corporation, have branch offices located
throughout the United States and abroad.
These firms benefit from a substantial
number of listings and expertise in a
variety of industries including restaurant,
finance, manufacturing and healthcare,
among others.
To establish a good reputation in the
small business community, business
brokers must hire experienced employees
who possess industry knowledge and
provide excellent customer service.
Consequently, larger firms compete to
hire the most experienced and reputable
professionals in the industry. While firms
also compete to offer the most attractive
fees to drive demand, brokers charge
Medium
Low
Mature
Low
Low
Medium
Low
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in this
industry is L owand
the trend is S
teady
22
WWW.IBISWORLD.COM
Major Companies
Major players
Sunbelt 4.6%
(Market share)
89.6%
Other
Player Performance
Murphy Business &
Financial Corp.
Market share: 5.8%
SOURCE: WWW.IBISWORLD.COM
Revenue
($ million)
(% change)
Operating Income
($ million)
2010
53.5
N/C
3.4
N/C
2011
55.0
2.8
3.8
11.8
2012
57.2
4.0
4.6
21.1
2013
57.6
0.7
5.1
10.9
2014
58.7
1.9
5.0
-2.0
2015
59.5
1.4
4.6
-8.0
*Estimates
(% change)
SOURCE: IBISWORLD
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Financial performance
Murphy Business is a privately held
company and does not disclose financial
results. Like many business brokers,
Murphy Business struggled during the
recession when the market plummeted
and private lending dried up. The
companys earnings spiraled downward
in the wake of the markets collapse,
Player Performance
Sunbelt
Market share: 4.6%
Revenue
($ million)
(% change)
Operating Income
($ million)
2010
39.6
N/C
2.5
N/C
2011
41.1
3.8
2.8
12.0
2012
43.5
5.8
3.5
25.0
2013
44.5
2.3
4.0
14.3
2014
45.7
2.7
3.9
-2.5
2015
47.2
3.2
3.7
-5.1
*Estimates
(% change)
SOURCE: IBISWORLD
WWW.IBISWORLD.COM
Major Companies
Player Performance
continued
Other Companies
VR Business Brokers
WWW.IBISWORLD.COM
Operating Conditions
of capital
intensity is L ow
Capital intensity
Economy
Advisory &
Financial
Services
Business Brokers
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Business Brokers
Capital Intensive
Labor Intensive
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Operating Conditions
Capital Intensity
continued
Revenue Volatility
Level
The level
of
Volatility is L ow
Volatility vs Growth
1000
Level
The level
Hazardous
Rollercoaster
100
10
Business Brokers
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
WWW.IBISWORLD.COM
Operating Conditions
Revenue Volatility
continued
Regulation is
Mediumand the
trend is S
teady
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
WWW.IBISWORLD.COM
29
Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
($m)
1,011.3
922.7
868.9
880.0
893.8
933.2
958.9
984.5
1,019.1
1,042.7
1,067.3
1,083.1
1,100.6
1,121.3
1,138.6
Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Industry
Value Added Establish($m)
ments
554.1
2,688
507.0
2,553
440.7
2,473
433.8
2,469
403.9
2,438
424.0
2,448
453.5
2,498
459.6
2,518
469.3
2,569
481.7
2,606
491.9
2,633
499.8
2,653
508.9
2,673
519.6
2,706
528.3
2,737
Revenue
(%)
-8.8
-5.8
1.3
1.6
4.4
2.8
2.7
3.5
2.3
2.4
1.5
1.6
1.9
1.5
Industry
Value Added
(%)
-8.5
-13.1
-1.6
-6.9
5.0
7.0
1.3
2.1
2.6
2.1
1.6
1.8
2.1
1.7
IVA/Revenue
(%)
54.79
54.95
50.72
49.30
45.19
45.44
47.29
46.68
46.05
46.20
46.09
46.15
46.24
46.34
46.40
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Establishments
(%)
-5.0
-3.1
-0.2
-1.3
0.4
2.0
0.8
2.0
1.4
1.0
0.8
0.8
1.2
1.1
Enterprises Employment
2,305
3,959
2,186
3,785
2,117
3,635
2,114
3,592
2,087
3,513
2,100
3,500
2,133
3,577
2,147
3,635
2,184
3,723
2,211
3,779
2,231
3,843
2,248
3,888
2,265
3,943
2,293
4,007
2,319
4,071
Exports
----------------
Enterprises Employment
(%)
(%)
-5.2
-4.4
-3.2
-4.0
-0.1
-1.2
-1.3
-2.2
0.6
-0.4
1.6
2.2
0.7
1.6
1.7
2.4
1.2
1.5
0.9
1.7
0.8
1.2
0.8
1.4
1.2
1.6
1.1
1.6
Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
255.44
243.78
239.04
244.99
254.43
266.63
268.07
270.84
273.73
275.92
277.73
278.58
279.13
279.84
279.69
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages/Revenue
(%)
46.10
45.25
41.81
41.39
36.80
36.03
36.89
36.68
36.75
36.60
36.48
36.44
36.44
36.43
36.50
Imports
----------------
Wages
($m)
466.2
417.5
363.3
364.2
328.9
336.2
353.7
361.1
374.5
381.6
389.4
394.7
401.1
408.5
415.6
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Employees
per Est.
1.47
1.48
1.47
1.45
1.44
1.43
1.43
1.44
1.45
1.45
1.46
1.47
1.48
1.48
1.49
Wages
(%)
-10.4
-13.0
0.2
-9.7
2.2
5.2
2.1
3.7
1.9
2.0
1.4
1.6
1.8
1.7
Corporate
Profit
($b)
1,529.0
1,285.1
1,397.0
1,746.4
1,816.6
1,998.2
2,037.4
2,072.9
2,100.5
2,116.0
2,249.4
2,292.3
2,331.9
2,351.1
2,333.3
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Average Wage
($)
117,757.01
110,303.83
99,944.98
101,391.98
93,623.68
96,057.14
98,881.74
99,339.75
100,590.92
100,979.09
101,327.09
101,517.49
101,724.58
101,946.59
102,087.94
Corporate
Profit
(%)
-16.0
8.7
25.0
4.0
10.0
2.0
1.7
1.3
0.7
6.3
1.9
1.7
0.8
-0.8
Share of the
Economy
(%)
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Jargon
IBISWorld Glossary
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