With the 4Q data now gathered for 2016, it’s clear now that it was another great year to sell a business. It’s useful to examine the trends of recent market transactions so we can get a better idea of what is currently going on in the business brokering market and make predictions about 2017 and beyond. So what does the data say? What is 2016 in review?
We reported last summer that small business sales were up at record numbers for Calder Capital and great for the market in general. In the end, 2016 turned out to be a record year in terms of the number of small businesses acquired: 7,842. In terms buyers and sellers, the market showed signs of balancing out even more. Asking prices for businesses remained consistent, and sale prices ticked up only slightly, which means that both buyers and sellers agree more on fair market valuation.
Not only did businesses sell for listed prices, the time they spent on the market lowered from 188 days in 2016’s first quarter to 160 days in the fourth, a significant drop. From Q4 in 2015 to Q4 in 2016, there was an 11.6% drop in time businesses spent on the market. This was great for sellers, and indicates that buyers were aware of good opportunities and eager to take advantage of them.
Businesses continued and continue to come on the market. Throughout the year, there was a steady supply of business offerings, with business brokers indicating that the large majority were the result of Baby Boomers retiring or otherwise transitioning ownership. The wave of Baby Boomers retiring is far from over, however. It’s ramping up. 2017 should continue this trend, and business brokers recently surveyed revealed that they feel positive about the market going forward. With 13 transactions completed, Calder had a record year of businesses sold, and we currently have many listed opportunities for interested buyers to peruse.
No one can predict the future completely accurately, and the economy and the regulatory environment are changing, but if you have been considering selling your business or have begun to plan your exit strategy and are wondering if now is a good time to sell, it is. The market has greatly improved over what it was a few years ago, and with better financing options and the business community feeling positive about the direction of the economy following the recent election, 2017 looks very positive. If you would like to talk to a business broker about the details of your specific situation, call Max Friar today at 616-439-1456. We would love to discuss your options with you.