The market for buying and selling businesses is looking more attractive today, according to a new survey.
A strong majority (80%) of prospective buyers feel confident they would get an acceptable price in the current market, and 65% of sellers feel they could also find a price that meets expectations, according to a recent survey conducted by BizBuySell.com, an online marketplace for for-sale businesses.
“This industry got decimated through the recession and from 2008 to 2012, but in 2013 it’s picked up significantly,” says Josh Sevick, a managing director with Sunbelt Network, a business brokerage firm.
“One of the reasons why you had such poor results around the recession, is that businesses weren’t making a lot of money. These transactions are typically valued off the profitability, and as the profitability went away, valuations tanked,” says Sevick.
Now that profitability is back up, he says more business owners – who often view their companies as their retirement nest eggs – are willing to cut out a little early.
Access to Financing an Issue
But financing remains an issue, according to BizBuySell.com’s Group General Manager Curtis Kroeker. Nearly half of buyers using the site want seller financing in a transaction, which means that sellers agree to take 20% or more of the sale price in a loan paid back over time with interest. But only 25% of sellers on BizBuySell.com are willing to consider this.
Sevick agrees that lack of access to financing remains an issue. “It’s starting to loosen up, but it’s still not back to where it was pre-recession,” says Sevick.
That said, there’s more agreement when it comes to sellers willing to help out buyers post-transaction. Seventy-five percent of survey respondents say they want the owner to stay on at least one day per week for six months, and 56% are willing to participate in this setup.
Most Popular Businesses on the Market
BizBuySell.com says restaurants are the most popular businesses to buy at the moment; nearly 25% of prospective buyers on the site want in on the restaurant industry.
Sevick says small manufacturing is also a hot commodity.
“If I had a $2 million manufacturing opportunity come onto the market right now, I could pick up the telephone and let folks know, and there’d be a lot of interest,” says Sevick.
He says sellers in general have the upper hand right now, as there’s still not a ton of inventory on the market.
Matt Haller, a spokesman for the International Franchise Association, says restaurants make up half of the 1,300 franchise concepts belonging to the association. From his perspective, service-sector franchises are growing the fastest, with today’s buyers mostly interested in personal services like pet care, education and home healthcare.