This past year was a record year for businesses changing hands. In a survey of small business owners, conducted by BizBuySell, more businesses were sold in 2018 than in any other year, an increase of 4% from 2017. Business Brokers who were also surveyed attribute this ‘hot’ market to an increasing number of buyers and sellers as well as a general improvement in the small business environment. About half of business owners who were surveyed pointed to an increasing number of Baby Boomers entering retirement as the driving force behind more business listings hitting the market in 2018. The strength of the economy is also giving more people the confidence and motivation to run their own business and become their own boss.
In addition to more businesses being bought and sold in 2018, data shows that those sold were more financially healthy than in previous years. Owners were also, on average, able to list their businesses for sale at a higher price and receive more for their businesses. This shows that buyers are willing to pay more for financially healthy businesses. With the number of quality businesses entering the market rising, so is buyer optimism. As a result, many business brokers expect sale prices to continue to increase in 2019.
Both business owners and brokers are overall optimistic for the future and the overall sentiment is that the upcoming year of business sales will build on the success of last year. Of the business owners surveyed, 80% thought the small business economy would stay the same or improve over the coming year. With the market staying healthy, and more baby boomers moving into retirement age, the number of businesses being listed for sale and the number of subsequent transactions should increase. In addition, SBA loans are trending in buyers’ favor. SBA lending has become easier and more accessible, as the SBA is aggressively funding loans for qualified buyers looking to purchase successful businesses with strong financials. Easier financing helps open up the pool of potential buyers and results in more sales as well. Outside factors such as politics, interest rates and the stock market also have the potential for influencing the small business market, but right now the business sales atmosphere is very good and is expected to stay that way.
If you’re considering putting your business on the market, now is as good a time as any, but keep a few things in mind. Buyers are looking for profitable businesses, so to get the highest potential offers, make sure your company is showing sustainable growth. Make sure your books are in order as well. Good books are the key to proving how successful your business really is. Plan and evaluate your needs and goals. Get a business valuation to discover the true value of your business on the open market. Once you know the value, compare it to your post-sale financial needs and goals to make sure they match up.
Corporate Investment Business Brokers can assist with every step of the business sale process. Whether you are ready to sell your business right now, or considering doing it in the near future, we can help you move the pieces into place to help you get the most value out of your business. CIBB has a network of qualified buyers looking for quality businesses. Contact us today to start with a free, no obligation business evaluation.