Business Transaction Market Update
Transaction Growth Up More Than 41% from Same Period Last Year
Small business sales have continued to improve through 2013 and into the Third Quarter as a result of the improving overall economy, strong supply and demand fundamentals (i.e., an aging business owner demographic and an increase in the number of qualified business buyers) and continued improvement in small business performance.
After years of limited supply and demand in the small business market, both are picking up as the economic recovery is starting to take hold. Many Baby Boomers have been looking to exit their business and retire for some time now, but either haven’t been able to close the sale or have delayed selling in hopes of a higher price once their business performance and the economy recovered. The confidence of such owners that they can now receive an appropriate sales price in a reasonable time appears to have blossomed and supply is coming onto the market. Indeed, according to BizBuySell’s recent Buyer and Seller Confidence Survey, 70% of current small business sellers expect to be able to sell their business within one year of listing it.
In terms of demand, buyers who wanted to purchase a business became understandably hesitant once the Great Recession hit in 2008. They either did not have the confidence to purchase a business in such an uncertain economic environment or found that acquisition financing was not available and that their own financial resources were weakened. However, the upturn in economic activity and personal wealth, combined with continued improvement in small business health, have increased buyer confidence that they can find a sustainable and growing business to buy and do so in a reasonable amount of time. In fact, according to BizBuySell’s recent Buyer and Seller Confidence Survey, 88% of prospective buyers consider themselves in the market to purchase a small business within the next 1-2 years.