07 Jan Small Business Transactions Will Increase in 2015 (Part 1 of 2)
We wanted to pass along new BizBuySell survey results that show national business brokers are confident 2015 will be a big year for small business transactions, specifically because of retiring Baby Boomers. Some key findings:
- Transaction were up in 2014: 67% of respondents say they experienced a year-over-year increase in transaction activity during 2014
- Baby Boomers were retiring: 78% attributed a minimum of 25% of their 2014 closed transactions to Baby Boomers
- Brokers are optimistic: 82% expect transaction activity to improve in 2015
- Brokers in the East & Midwest regions are more positive than in the West region: 22% of brokers in the East and Midwest regions believe transactions have already hit the levels they saw before the recession versus only 12.5% of those in the West
Business Brokers: Small Business Transactions Will Increase In 2015 Thanks to Strong Baby Boomer Sales
BizBuySell survey of brokers reveals optimism that 2014 improvement will continue next year; respondents in East & Midwest more optimistic than those in West
San Francisco, CA – In a nationwide survey of business brokers conducted by BizBuySell.com, the Internet’s largest marketplace for buying or selling small businesses, roughly 67 percent of respondents say they experienced a year-over-year increase in transaction activity during 2014. This is consistent with BizBuySell’s quarterly Insight Report, which shows the business-for-sale website is on pace to record the most small business transactions since data tracking began in 2007.
The main driver of this growth appears to be an increase in the number of qualified buyers on the market, as more than 35 percent of brokers selected that as the top factor helping business transactions close. That’s an 18 percent increase from the number of brokers who said the same thing in last year’s survey.
Another 26 percent of surveyed brokers credit this year’s transaction activity to general improvement in the small business environment.
“The businesses for sale have improved their financial performance,” one broker noted.
Improved business performance is likely behind the rise in buyers as well. Of the brokers who saw more buyers in the market, over 43 percent said the buyers were drawn in by an increased confidence in the economic recovery.
Those buyers are likely excited about the availability of more financially successful businesses on the market. Brokers agree there is opportunity for today’s buyers as more than 59 percent of survey respondents believe today’s business-for-sale conditions favor buyers over sellers.
“It’s encouraging to see that brokers are finding an increasing number qualified buyers in the market,” Bob House, Group GM of BizBuySell.com and BizQuest.com, said. “Having buyers willing to step in and take over the ongoing supply of businesses on the market shows how far we’ve come since the lows experienced during the recession.”
Younger Generation Taking Over Businesses From Baby Boomers
The increase in small business owners looking to sell over the past few years has been driven by the growing number of Baby Boomers reaching retirement age. Brokers witnessed this first hand. More than 78 percent of brokers attributed a minimum of 25 percent of their closed transactions to Baby Boomers. More specifically, 38 percent of brokers said between 50 and 74 percent of their transactions were generated from Boomers. With still many more in this generation reaching retirement over the next few years, brokers are confident this trend will continue as is evident by the 78 percent of brokers who expect a larger amount of Baby Boomers to sell their businesses in 2015 than did in 2014.
Naturally, as the Baby Boomer generation sells off their businesses, the most common buyers are from a younger age group. Nearly 75 percent of brokers indicated their buyers were most likely to be between 30 and 49 years old. Sellers, on the other hand, were most likely to be between 50 and 64 years old.
To be continued in tomorrow’s posting
BizBuySell is the Internet’s largest business for sale marketplace. Since 1996, BizBuySell has offered tools that make it easy for business owners and brokers to sell a business, and potential buyers to find the business of their dreams. BizBuySell currently has an inventory of approximately 45,000 businesses – spanning 80 countries – for sale at any one time and receives more than 1 million monthly visits. The site also features an extensive franchise directory as well as an easy-to-use business valuation tool. Please visitwww.bizbuysell.com for more information.
BizBuySell was founded in 1996 and in 2012 became a division of CoStar Group, Inc. (NASDAQ – CSGP) – commercial real estate’s leading provider of information and analytic services. CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information and offers a suite of online services enabling clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. For more information, visit www.costar.com.