Small Businesses Being Sold
Since 2007, the website BizBuySell has been keeping track of data related to buying and selling online businesses. According to their quarterly insight report, a total of 7,842 closed transactions were reported last year, the highest number on record. In a survey from the report, 63% of respondents said they experienced more deals in 2016 than the previous year. So what changed?
2016 was actually a pretty good year for small businesses. The report noted that those businesses that were sold grew both their revenues and cash flow from 2015. This made the companies more valuable, sparking an interest from both people looking for a good investment and those looking to sell their business. With baby boomers getting older and millennials seeking opportunities, more sales are happening. 70 percent of business brokers in the report’s survey said that at least a quarter of their closed sales were related to baby boomers, a trend that 98 percent said would most likely continue into the new year.
A combination of low interest rates and a favorable financing environment had their effect as well. Capital is cheaper, and therefore some buyers would rather control more of their fate than simply rely on a volatile stock market. While small businesses are changing hands, healthier businesses are poised to continue their success. Although asking and sales prices were flat year to year, asking prices for companies in the final quarter of 2016 were nearly 5 percent higher than the same quarter a year earlier, and sales prices were up 3 percent as well, painting an altogether pretty picture for 2017.
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