The second quarter of 2019 ranks as the most active for business sales over the last decade. The data comes from the Q2 2019 BizBuySell Insight Report, which looks at the national business-for-sale trends and transaction activity.
BizBuySell Q2 2019 Insight Report
According to BizBuySell, 4,948 transactions took place in the first half of 2019. This puts it on pace to be the second most active business-for-sale market since BizBuySell started tracking data in 2007. The record-setting level goes to 2018 with a total of 10,312 sales for the year.
Although Q2 is historically high, it is down by 9.6% from the same time last year. The report says political policies may be partially responsible for this dip. More specifically, it is attributing the true impact to tariffs between the U.S. and China, as well as the potential of additional tariffs.
However, President of BizBuySell.com and BizQuest.com Bob House says it is still a great time for the segment in the release for the report.
House goes on to say, “The data shows that even with economic uncertainty, 2019 remains a great time to buy or sell a small business.”
Adding, “There are still a growing inventory of businesses hitting the market, and financially, these businesses are performing better than ever. The ongoing tariff discussions will certainly be concerning to some buyers and are something to watch in the coming months, but based on what we’ve seen, there is still much value to be had in today’s market.”
Small Business Sentiment
In addressing the tariffs with China, 43% of small businesses say they are facing rising costs. And 64% of owners affected by the tariffs say they are going to raise prices to offset rising supplier costs.
If a 25% tariff on imported goods lasts more than a year, 20% of owners say they can’t stay in business. This data comes from a poll carried out by BizBuySell to determine the impact of the U.S. — China trade war on small business.
In order to avoid the rising costs, 65% say they are considering switching suppliers outside of China. Of these, 54% are going to look for U.S. based suppliers. This will further strengthen the U.S. economy and the many business which will benefit from this move. And if these businesses are for sale, it will undoubtedly raise the asking price by the owners.
In Q2 of 2019, a total of 2,444 transactions were reported. While it is lower than Q1, the asking price increased to a median sale price of $270K. This is a 13% increase from the same time in 2018 and a considerable jump from the $225K of Q1.
When it comes to the financial health of small businesses, the median revenue increased by 14.3% to $601,380. This is the highest mark on record, which also indicates the health of the U.S. economy overall. Accordingly, the median cash flow also grew to $130K, an 8.3% increase.
All of this is adding up to record-high median asking price of $299K, a 15% increase from the second quarter of 2018. The report says owners are setting a higher bar for their businesses as their financial improves. At the same time, buyers are willing to pay more for businesses with healthy financials.
The BizBuySell Insight Report is a nationally recognized economic indicator which tracks the health of the U.S. small business economy. It includes that data of more than 70 major U.S. markets across 65 small business industries.
You can read the full report here.
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