According to BizBuySell.com, one of the Internet’s largest business-for-sale marketplace, strong business-for-sale activity continued in the first quarter of 2018 with record-breaking sales prices and transactions highlighting a positive start to the new year. The full results are included in BizBuySell’s Q1 2018 Insight Report, which aggregates statistics from business-for-sale transactions reported by participating business brokers nationwide.
During the first quarter of 2018, small businesses sold for a median sale price which is the highest since BizBuySell started tracking the data in 2007 and a 3.4 percent increase from a year ago. Small business owners should take note of the record prices. For those considering a sale, now appears to be a great time to at least contact a broker and ask how your business stacks up against the overall market.
The median cash flow of businesses sold in Q1 increased 2.3 percent over the same time last year. Median cash flow is often considered the best indicator of a business’ success. BizBuySell’s latest small business owner poll shows that 72% of owners believe financials will continue to rise in 2018. Notably, tax reform appears to be one of the larger factors driving this positive outlook. Tax reform also appears to be good news for the overall small business environment as 60 percent of benefiting owners plan to hire additional employees in 2018 and 57 percent plan to increase compensation.
With owners entering the market to capitalize on rising prices and buyers willing to spend more for healthier businesses, the net result was a 13.1 percent increase from this time last year and the most businesses reported as sold in a quarter since BizBuySell began collecting this data.
Finally, while the Amazon Effect continues to lurk, the number of retail businesses sold increased 2.5 percent year-over-year accompanied by a near 3 percent increase in median sale price. 71 percent of retail business owners said they did not see Amazon as a threat to their business, confidently stating that customers still value traditional small business retailers.
In summary, both buyers and sellers should be aware of factors that could change throughout the year. Tax reform remains a controversial issue and a change in the make-up of Congress this year could alter the government’s perspective on the matter. The US-China trade war is also a concern as the tariff-fueled disagreement has already caused volatility in the stock market and may end up impacting owners’ costs. That said, all indicators point to another strong year.
You can find the full report at: