According to BizBuySell.com, one of the Internet’s largest business-for-sale marketplace, a record number of businesses changed hands in the 2018, setting a new high for three years in a row. The full results are included in BizBuySell’s Q4 2018 and year-end Insight Report, which aggregates statistics from business-for-sale transactions reported by participating business brokers nationwide. Additional highlights of the report include…
• Those businesses that sold in 2018 were financially healthier than in previous years. The median revenue of a sold business grew 6.3 percent as compared to prior year. Similarly, the median cash flow increased 4.3 percent from the year prior. Both numbers represent the highest financial performance of sold businesses since BizBuySell began tracking this data.
• Current owners surveyed saw a similar financial success with nearly half (49 percent) saying their business performed better in 2018 than in 2017. Another 36 percent had similar numbers and just 11 percent said they had a worse year. When asked why they believe 2018 was so successful for small businesses, 49 percent credited today’s economic conditions while others noted consumer confidence (22 percent) and improved management practices (7 percent).
• Because of the uptick in financial performance, owners were able to ask for and receive more for their businesses in 2018. The median asking price for a small business saw a 10 percent increase from 2017. The result was a median sale price for all closed transactions in 2018 being 9.3 percent higher than in 2017.
• Franchise businesses and retail stores were most popular amongst buyers, while interest in other popular categories like restaurants took a step back. Reported transactions of established franchise locations grew 27 percent in 2018 following similarly strong growth last year, indicating buyers are still enthusiastic about buying franchise businesses with an established track record and brand name. 2018 also saw a 10 percent higher cash flow multiple paid for franchises which may reflect a premium provided by franchise branding.
• Within retail overall, businesses saw a 20 percent increase in closed transactions despite smaller financial numbers while restaurants had a 14 percent drop in transactions despite growing financials as compared to 2017. The median revenue of retail businesses sold in 2018 declined 9.6 percent year-over-year and median cash flow was flat. The smaller financials come at a time most retailers are faced with increasing challenges, like Amazon, to their business. It could also indicate buyers’ interest in finding smaller businesses that are less likely to compete with those large retailers. On the opposite end, restaurant median revenue and cash flow increased by 15.3 and 6.6 percent respectively, showing that even while less restaurants are changing hands, those that are available show healthy financials.
• Manufacturing businesses continued to perform steadily, with closed transactions slightly increasing 1.3 percent, but more notably, median sale prices grew by 22.9 percent.
You can find the full report at: