Evaluating a Red-Hot Market
A new article from BizBuySell entitled 2018 Set New Small Business Sales Record as Buyers Eagerly Exit Corporate World is quite an eye-opener. Simply stated, businesses, all kinds of businesses, are selling like never before.
If you have a business and you are considering selling, then realize that now truly may be the time to jump in and put your business on the market. The market is historically hot. All one has to do is take a closer look at the numbers as outlined by BizBuySell.
In 2013 the number of closed small business transitions stood at 7,056, whereas in 2018 this number jumped considerably to 10,312. Between 2016 (10,312) and 2017 (9,919), there was a massive jump. Last year only continued to build on the already impressive numbers from 2017.
It is also important to note that the last three years have all been record years. Brokers have noted that there has been an increase in both the number of buyers and sellers.
Of course, all of this leads us to some questions. Why are so many business owners looking to sell and why now? Why is the market so very hot?
In the BizBuySell article, a surveyed owner commented that purchasing a business has become easier for first-time buyers and this factor has, in part, contributed to the noticeable increase in sales volume. Other factors cited in the article include Baby Boomer retirement, and owners selling to avoid dealing with rising operational costs stemming from increased minimum wage requirements and health care. Some of those surveyed also included pending regulations, both political and economic, as factors in their decision to sell.
On the buyer end, it appears that two factors are at play, namely, buyer confidence that the economy will continue to be strong and greater access to capital. Additional factors, such as business owners noting that their businesses were performing better, also likely contributed towards making 2018 yet another record-breaking year.
For those looking to sell, there is considerable good news. The median asking price and sale price have both continued to trend upwards. Business brokers are optimistic about the future and for good reason. Whether you are considering buying or selling a business in the near future, it is prudent to talk to an experienced business broker. A broker can help you navigate this very hot market and make a deal that is beneficial for all parties involved.