2018 was a banner year in the business-for-sale marketplace, and as the first two quarters of the year are typically stronger than the last two – it may be helpful to use the first half of 2018 to see where 2019 might end up.
BizBuySell’s 2nd Quarter 2018 Insight Report once again showed record highs in the business marketplace, with small business transactions up 6.7% over the previously record-breaking numbers in the same quarter of 2017. The market has been steadily growing since the recovery for small businesses began in 2013, but the second quarter of 2018 marked the largest number of businesses changing hands since data collection began in 2007.
That trend continued for the rest of 2018, rounding out a record-breaking year overall. 2018 saw 10,312 businesses sold – the highest number yet. This was a 4% increase from 2017 and a very large 31% increase over 2016.
Why are so many businesses changing hands?
Baby Boomers. This large demographic group currently owns a whopping 53% of small businesses, but they are very quickly approaching retirement. Close to 60% of Baby Boomer business owners plan to sell in the next two years, so the market is primed for an influx – if not a tidal wave – of businesses for sale.
What does that mean for the market?
It means a large selection of good businesses for buyers to choose from and more competition between listings for the seller’s side of the transaction.
Median revenues in 2018, up 7.4% from 2017, showed small businesses were healthy. Also, the continued growth of the economy meant sellers were reaping the rewards of high sales prices – as the median sale price of the first two quarters of 2018 was up 4.4% over the same quarters of 2017. Numbers this strong will likely continue, if not increase, as we move further into 2019 – but those who survived the meltdown of 2008 may be worried about another bubble.
Other economic factors, like ever-changing immigration policy, tariffs, government shut-downs and trade wars could also drive the small business market – although it remains to be seen what those effects might be.
The smart move?
If you own a business and were planning on selling in the foreseeable future, now is the time. The market is booming, with active listings up 5.1%. This trend may continue to climb or we may be quickly approaching the peak. There are buyers with money and your business is in the black, so the safest bet is to sell while the selling is good. This is also true if you were considering selling so you could reinvest in a different business. The businesses on the market today are healthy, so a serial entrepreneur would be smart to take the large profit from a sale today and jump into a new opportunity now.
Want to know what the market looks like for your industry in particular? Do you have questions about when you should sell? Contact us today.
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