BizBuySell shared their latest “Insight Reports” today in which one of the key findings was the sale of small businesses were down nearly 9% in the third quarter versus same period last year. “Brokers reported a total of 1,814 businesses changing hands during the quarter, down from the 1,987 in 2014, as well as the 1,913 recorded in Q2 2015. While the third quarter is typically slower than the second, the year-over-year drop indicates a stabilized activity level after the market reached a record high in 2014.”
Some key highlights:
- The median revenue of listed businesses grew to $450,000, up from $432,556 in 2014.
- The median cash flow rose from $100,00 in Q3 last year to $104,000 this year.
- Slightly higher median asking price, up to $250,000 compared to $248,189 last year – much it due to improved financials.
- The median sale price of a business sold in Q3 slipped slightly from $189,000 last year to $185,000 this year.
- The median asking price remained stable at an even $200,000, equaling a strong 94.5% ask/sale ratio.
- The median revenue of sold businesses grew from $423,828 in Q3 2014 to $438,000 in Q3 2015
Bob House, Group GM of BizBuySell.com and BizQuest.com said. “The consistently strong financial performance of small businesses bodes well for the future and is why owners are growing more confident in their ability to earn healthy sale prices upon exit.”
The report also mentions that “Overall, this year’s small business transaction data appears to be following the trend of the past few years: steady activity along with improving financials. Transactions are on pace to dip just 3 percent from 2014 levels, which were the highest since BizBuySell started tracking data in 2007. As the market stabilizes, we can expect to see these levels plateau and continue near this high water mark. For buyers, this represents a strong value opportunity as a result of increasing revenue growth and stabilizing prices.
At the same time, the rising financial indicators show that there is a large amount of high-performing small businesses still on the market. The median revenue of small businesses has been on a steady incline since mid-2012, leading to higher sale prices upon exit. As more owners grow confident that they can achieve a profitable sale, we expect even more businesses to hit the market.