Small businesses have been exchanging hands at a record-breaking pace, according to BizBuySell.com’s Fourth Quarter 2017 Insight Report. Total small business transactions in 2017 shattered 2016 highs by 27%, with 9,919 closed transactions reported compared to the 7,842 in 2016. These numbers are music to the ears of any entrepreneur looking to sell their business.
As of 2017, the majority of entrepreneurs selling their businesses are baby boomers trying to secure a retirement fund. In fact, baby boomers made up 58% of owners selling their businesses. “It’s exciting to see the number of sellers, particularly Baby Boomers, who were able to close deals,” said Bob House, President of BizBuySell.com.
While baby boomers left their businesses to sip martinis in paradise, franchise owners also saw significant increases in business sales. Closed transactions of existing franchise locations made a 45% leap in 2017 compared to 2016. The 2017 data revealed that roughly 9.5% of reported transactions were of franchise businesses.
These findings were in line with 4th quarter franchise financials. Median revenue grew 22% and cash flow bumped up 8%. This caused significant uptics in asking prices, up 27%, and final sale prices, up 20% to $210,000.
Retail businesses also did well, with median revenue jumping 17% to $600,000 per business sale – up from $513,000 only a year ago. Median sale price grew in positive correlation with revenue, up 11% to $199,500.
Each of these findings represent a healthy and thriving business climate. The next most obvious question is: how long will the positive trend last?
“For four years now, we’ve seen steady growth in the small business market, with reported transaction totals in the [$]7,000s range. Last year, however, seems to represent a new tier of activity that brings a lot of momentum into 2018,” says House. “As long as small business financials continue to remain strong and buyer confidence high, the market should continue its momentum well into 2018.”