Record Number of U.S. Small Businesses Were Bought and Sold in 2016

sale-of-businessBizBuySell.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.

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William Bruce is an Accredited Business Intermediary and Appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership.  His practice includes consulting services nationally to business owners and buyers.
He currently serves as president of the American Business Brokers Association.  He may be reached at (251) 990-5934 or by email at Will@WilliamBruce.org.

About William Bruce

President, American Business Brokers Association / Business Broker and Accredited Business Intermediary assisting business buyers and sellers with the transfer of ownership since 1986 / Author: How to Buy a Business.
This entry was posted in Business Valuation & Appraisal, Buying or Selling a Business and tagged . Bookmark the permalink.

2 Responses to Record Number of U.S. Small Businesses Were Bought and Sold in 2016

  1. Interesting statistics. Surprised to learn that businesses in the high-cost state of Connecticut sold for lowest valuations in the country. And delighted that businesses in my home state of NC sold for the highest multiples.
    Tom MacPherson
    SummitAcquisitions.com

  2. Marv White says:

    Our costs are high but It is overblown. There seems to be a kind of branding associated with CT that is not accurate. We have some great businesses that seem to be on a fire sale so it may be somewhat self-fulfilling.

    Marv White
    http://www.smallbizseller.com

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