According to a new survey, the market for buying and selling small businesses has become stronger in the past year. A recent survey conducted by BizBuySell.com (an online marketplace for for-sale businesses) reported that 80 percent of prospective small business buyers felt confident that they would get an acceptable selling price in the current market, with 65 percent of owner sellers citing that they felt they would be able to secure a price in line with their expectations.
While the buying and selling of small businesses was strongly impacted by the recession, the industry has picked up tremendously in 2013. Experts are attributing the growth to the recent increase in profitability of small businesses overall. With the onset of the recession, business revenues were significantly down, tanking the valuations of businesses and decimating sales. Now that profitability is back up, business owners are able to get more out of their initial investment and thus are much more willing to sell than in years past.
Despite the market increase, lack of access to financing remains an issue. In fact, nearly half of buyers on BizBuySell.com are looking for seller financing in the transaction. This means that sellers will agree to take on 20 percent or more of the sale price (via an interest-based loan) in order to facilitate the sale. However, only 25 percent of sellers are willing to consider carrying buyers in this way. However, there are many more sellers who are willing to provide critical support for buyers once the transaction is complete. Of buyers, 75 percent want the owner to stay on at minimum 1 day a week for 6 months, and 56 percent of owners are willing to comply with this stipulation.
According to the survey, restaurants are currently the most popular business on the market, with nearly 25 percent of prospective buyers looking to get into this type of business. Small manufacturing is also in high demand. It’s generally believed that it remains a sellers’ market, as there still isn’t a lot for buyers to choose from.
Karol, Gabrielle. “Is It the Right Time to Sell Your Business?” FOXBusiness Small Business Center. 10/4/13.