A report from BizBuySell.com, the Internet’s largest business-for-sale marketplace, shows that sales of small businesses rose 49 percent in 2013 compared to 2012, and that the median sale price was higher.
The 2013 increase in small business transactions marks the first year of great progress in the business-for-sale industry since record lows were set in 2009.
In 2013, 7,056 small business sales were reported by brokers to BizBuySell.com, a big increase over the 4,730 that were sold in 2012. Leading the charge were the restaurant and retail sectors, with restaurant transactions increasing 78 percent in 2013 compared to 2012 and retail business sales growing by 71 percent.
The BizBuySell.com report suggests that the striking increase in 2013 small business sales can be credited to such factors as the strengthening economy, healthy supply and demand basics and sustained development in small business fiscal performance.
More good news: The median revenue of small businesses sold increased 13 percent to $405,905, while median cash flow grew 9 percent to $97,000. Such sturdy financial improvement also helped drive the median sale price up 13 percent to $180,000.
The report indicated that, although sale price multiples were somewhat down, the growth of demand in 2013 was energetic as potential buyers saw stronger small business financials and economic activity. Growing individual prosperity and an improved lending atmosphere also brought in additional eligible buyers with adequate resources to purchase a business. And supply growth was even more impressive as Baby Boomers came back into the market secure that they could at last obtain a suitable sales price.
“This year was the year of recovery that everyone has been waiting for since the September 2008 financial crisis,” Curtis Kroeker, Group GM of BizbuySell.com and BizQuest.com, said in a release. “After the onset of the Great Recession, transaction activity fell sharply until mid-2009 and then bumped along without meaningful growth. This created pent-up supply and demand that needed the right economic and capital conditions to materialize. In 2013, those conditions finally came together resulting in a large increase in business transactions and contributing to a healthier small business environment overall.”
Looking ahead, 76 percent of business broker survey respondents anticipated that even more Baby Boomers would put their business up for sale in 2014 than did so in 2013.
“While we certainly are not completely out of the woods, the business-for-sale market is trending in the right direction …” Kroeker said. “Simply put, the fundamentals are right for sustained transaction strength.”
