Third Quarter 2016 Numbers Rise for selling businesses
The end of the third quarter resulted in several significant increases in key areas of business transactions, specifically businesses sold, businesses listed for sale, and businesses asking price and selling price. These numbers indicate a very positive trend for those looking to buy or sell a business and also indicate a positive beginning to 2017 for the business-for-sale marketplace.
Number of businesses sold increases
According to BizBuySell, a total of 2,090 transactions took place during the third quarter of 2016. This number reveals a tremendous increase, over 15%, compared to the third quarter of 2015. In fact, this number is the highest third-quarter number reached since the second quarter of 2008.
This momentum could foreshadow a “record-breaking” year for small business transactions, according to BizBuySell.
Number of businesses listed increases
In addition to the increase in the number of businesses that changed ownership in the third quarter, the number of businesses listed for sale increased as well. Specifically, the number of businesses listed for sale has increased 5.1 percent above those listed for sale in 2015, according to BizBuySell.
Experts hypothesize that small business owners may wish to “take advantage of this hot market” and list while there are buyers actively seeking businesses to purchase.
Number of businesses sold near asking price increases
Another positive trend in the business-for-sale marketplace is the decrease in the difference between asking price and selling price. Basically, businesses are selling at a price that is closer to the actual asking price than in previous years.
BizBuySell reports that that this third quarter boasted a 7.6% increase in the median sale price of small businesses. Experts attribute this trend to “financially healthy” businesses that buyers want and sellers who are setting “more realistic” asking prices.
Average time on market decreases
In the third quarter, the average days on the market for businesses decreased by 4.5% compared to that of 2015, according to BizBuySell. During the third quarter of 2015, businesses averaged 179 days on market; this number moved to 171 days during the third quarter of 2016.
With the average number of days on the market decreasing in the third-quarter, many owners who have been considering selling may choose to do so now, understanding that fewer days on the market is a tremendous benefit.
Implications of these reported numbers could be helpful for both buyers and sellers. For buyers, more businesses are listed for sale, providing greater opportunity to purchase. In addition, sellers have reportedly listed their businesses at “more realistic” prices, meaning the negotiation process may be less time-consuming and less harrowing than in previous quarters.
Further, results of a BizBuySell survey report that only 29% of buyers feel that waiting to purchase would benefit them financially. This means that a large percentage of buyers are ready to “jump into the action” and seriously consider purchasing a small or medium-sized business. A definite win-win for buyers and sellers of small and medium-sized businesses.