BizBuySell.com, the Internet’s largest business-for-sale marketplace, reported recently
that annual small business transactions reached record levels in 2016, topping 2015’s totals by 8.6 percent.
The results are included in BizBuySell’s annual Insight Report, which aggregates statistics from business-for-sale transactions reported by participating business brokers nationwide.
A total of 7,842 closed transactions were reported in 2016, the highest yearly total of small business sales since BizBuySell first started tracking data in 2007. Primary factors cited for the reported growth include (1) an improving small business environment, (2) more owners looking to sell, (3) more qualified buyers on the market and (4) better financing options.
Included in the total number of businesses reported sold were 17 businesses that changed hands in Birmingham, Alabama at an average selling price of 3.15 times cash flow, also referred to as discretionary earnings. There were 93 transfers reported in New Orleans with an average selling price of 3.12 times cash flow, and 207 sales recorded in Nashville with an average valuation multiple of 2.64.
Interestingly, the highest average valuations expressed as multiple of discretionary earnings were reported in North Carolina. The lowest were in Connecticut.
“After several years of strong business-for-sale activity, it is great to see even more growth in 2016,” Bob House, President of BizBuySell.com said. “Not only are more small businesses changing hands, but healthier businesses put the new owners in a great position for continued success. This bodes well for the market, but also points to a bright future for small businesses overall.”
With a record number of Baby Boomers retiring from business ownership and buyers attracted to stronger financials and an increasing number of millennials looking to enter small business ownership, signs point to a well-balanced market.
“Overall, small business indicators point to a healthy market for buying and selling in 2017,” House said. “Although there will certainly be issues to watch under the new Trump administration, as long as small business financials continue to improve and a steady supply of listings enter the market, transaction activity should continue its momentum well into the new year.”
Author’s full disclosure: William Bruce participated in this survey as a business sales, mergers and acquisitions adviser reporting completed transactions in which he was involved to BizBuySell.