What is Current Market for Selling a Business (or Buying a Business). I’ve been involved with business sales for approximately 25 years. Fifteen years as a business buyer and Seller during which I acquired 9 businesses and 9 years as a business broker representing business buyers and sellers.
As a business broker working with business Sellers and Buyers in South Carolina and Florida we are afforded access to a lot of market information as it relates to business transactions, what businesses are selling for, and trends. Sales Data and terms on these private transactions are not readily available to the general public.
As a business owner or potential business buyer it is not unusual to “hear about someone that sold his business of $X “. But often that information is incomplete or erroneous.
Below is some market information showing charts and trends relating to business sales throughout the US. I believe it can provide some insights to both potential business sellers in South Carolina or Florida as well as Business Buyers. Also below I’ve highlighted my insights to what I believe some of this information means and what may be worth noting.
A review of over 7000 businesses sold during 2015 show:
- The median asking price grew 12.5 percent from $200,000 in 2014 to $225,000.
- The median sale price also increased a solid 7.6 percent year-over-year, from $185,000 to $199,000.
What Does this graph say about Businesses Sold?
A significant determinant of a business sales price is “Multiple of Cash Flow” or “Multiple of SDE (Sellers Discretionary Earnings). But this “Multiple” does vary based on business size ( Sales and Cash Flow). Businesses Sold with Sales of $1M-$5M will generally sell at a different multiple than business sold with Sales of $100k-$1M . Above graph shows as the cash flow of a business increases the multiple of cash flow also increases . This graph shows a business with approx. $150k of cash flow sold for 2.5 x that cash flow (CF). Whereas a business with $1M in cash flow sells for 3.1 times that cash flow (CF).
What does above graph say about Business Value and or Business Selling Price. ?
Above Graph depicts that The price of businesses sold ( as a multiple of cash flow ) has remained fairly steady over the last 4 years. Going forward, I expect this to remain consistent thru 2016.
What type of businesses are being sold? Above chart shows the types of businesses sold throughout the US in 4th quarter of 2015.
Are you looking to buy a business in South Carolina or Florida? Are you looking to sell your business. A business is not bought or sold in a vacuum. How does your business measure to other like or similar businesses? No two businesses are the same, but similarities do exist. Understanding value or potential value may be one of the more important steps that goes into the process of buying or selling a business.
Thinking about buying or selling a business? Please feel free to contact me Scott Messinger Business Broker to discuss any questions you may have on the process. And it is a process. Also, feel free to search on businesses for sale on my site at:
www. SellaBusinesssAdvisors.com. or contact me at Scott@GatewayBusinessAdvisors.com
or call direct at (864) 210-8226 or (239) 770-2421.
Selling your business requires you to prepare your business for sale. One of the important steps in preparing your business for sale is a well designed web site that produces results. Below is information from the perspective of an SEO Web Design firm.
Tampa SEO is a full service web design and SEO agency in Tampa, FL. Here’s an article they wrote regarding web design and SEO prior to selling your business.
Why You Need SEO & a New Website Before Selling Your Business
So you have decided to sell your business and are making moves to get top dollar for your baby. Being a good business owner you understand that although your business means the world to you in the business world it is about proving the dollar amount from both an appraisal and sales perspective.
Whatever your business may be, the prospective buyers want to see the purchase and new ownership process go as seamlessly as possible. This means all your records are in order, the permits or licenses are all up to date, and most importantly the business will continue to be as or more successful than it was with new owners. Tampa SEO highly recommends that a new website and SEO campaign can help you with the latter.
Your business website represents your professionalism
When it comes to business success most owners will agree that the online market is one of the most important. Your website is the representation of your products and services, your image, your authority in your industry, and a way to provide potential customers information in a day and age where the Internet is the first place people look. Basically, having a well-designed website will help build business, retain business and represents everything you have worked so hard for when you yourself can’t make a live impression.
Tampa SEO knows that a modern website helps businesses before, during, and at the end of their operation so that they can showcase their professionalism and utilize their website as an additional marketing tool. Although having a great website will help with conversions your business will still need a way to attract customers and PROVE that it is a great marketing tool before its sale. This is where search engine optimization (SEO) comes into play.
Photo (c) topseopicks.com
SEO is simple, easy, and fast way to get increased market share prior to selling
While a website can be the source and reason you convert leads, SEO is the reason these leads are finding you. A new website and SEO campaign helps customers or clients who are already looking for your products or services find you quickly and easily. When a customer goes on to Google and searches for a generic phrase related to your business SEO makes your website come up high in the rankings and improves the chances that that customer will make a purchase from you.
This relates to the sale of your business because with SEO all the website activity is quantifiable. When you can prove to potential buyers that you have X amount of traffic and X amount of conversions you have proved your market share and ability to sustain business in the future. This is a great selling point as most other marketing campaigns- TV, radio, Yellowpages, etc. are difficult if not impossible to measure.
Shows new buyer you have continued to improve the business while selling
Every business buyer wants to know that the risk they are taking by purchasing your business is justified. What better way than showcasing to them through your new website and SEO analytics that your business is sustainable and can continue to grow through attracting new customers online. You have showcased the effort to improve marketing before you sell your business and have begun the process of attracting a bigger clientele through SEO.
It seems that websites and Internet marketing are a piece of every business plan these days. When selling your business make the decision easy for the buyer. Showcase to them that you care about the success of the business even after ownership has been transferred by investing in a website and SEO campaign that will continue to be successful even after you are gone. It is a huge buying factor and can improve the bottom line you can charge for your business as it is all justifiable.
Scott M Messinger is a business broker based in Florida. I work with both business owners and individuals in the process of buying and selling businesses. I normally write my views and perspectives from a small business owners standpoint. The above article is helpful information provided from the perspective of an SEO Web Design Company.
Running a business, owning a business, buying a business, or starting a business requires a whole toolbox of skills, efforts, attributes, timing and possibly some good fortune. It is well documented that to successfully own a business buy a business or start a business requires skills such as:
- Being Driven
- a “Do whatever necessary” attitude
- Willingness to experience failures but not accepting failure as an option
- Financial ability
- Leadership skills, sales, marketing, the list can go on an on.
There is a new requirement that a small business owner needs to be part of his/hers skill set- the ability to tread water.
New Business Skill – Treading Water
Running a business over the last several years has required the small business owner to attain the skill of “treading water”.- And for this discussion I am defining treading water as the ability to “hang on” to the businesses until the economy recovers. And when one looks at our economy from a Main Street perspective in lieu of a Wall Street view, the need for one to be able to tread water for a couple more years may be needed.
My definition of a small business is not how the government defines small business, rather the millions of businesses with 50 or less employees (and the many with 5 or less employees), that currently are working harder to end up with less and essentially try to hang on until the economy turns around. Recessions don’t last forever?- right?
- Photo (c) illustraconsulting.com
A Rising Tide lifts all Boats…. I recently had been on an Alaska Fishing trip , and fishing up there is all about the Tides, and you plan and your time your fishing activities around them. But the tide you can count on. The boats and the docks are floating piers which allow the boats to move up and down with the Tide. Every whatever hours, tide comes in a raises all the boats about 15 feet higher, tides leave all boats go lower. One day the economy will improve and the vast majority of businesses will benefit (rise) from this improved situation.
But for how long can the small business owner tread water until the economy improves overall consumer spending, a beat up housing market, and significant unemployment problems. As a business broker I engage in confidential discussions with business owners and hear the stories of small business owners using the high rate credit cards to help finance the business.
I talk with the small business owner that “owns” the building he operates , yet is so upside down on the building that turning that “asset” back into an asset is a remote possibility at best. Most all payroll cuts have been made, some have moved into small leased spaces, others have long since made adjustment to personal and business expense spending to adjust to these difficult times.
Treading Water…. How Much Longer
How long will the small business owner need to tread water for? We all know it is prudent to have savings/reserves for backup and or down days, but how long can reserves hang on for. “Business Owner A” may be able to “tread water” for 1 year yet”Business Owner B” may be able to tread water for 2 years- then what? The previous business I had owned for 20 years did go thru multiple recessions. If you own a business for any duration of time you will experience the economic cycles that do occur. This recession is so very different.
As a small business owner currently working as a business broker in Florida, I continue to look at newer/better ways to conduct my business activities in this environment.hings that worked 2 years ago, may not work now. It will be nice one day when the tide comes in and raises all boats, but in the mean time I focus on improving my situation.
I expect no help from government, banks, or others, waiting for help from those entities, to me is like waiting for a tide on a land-locked pond. People and business are still buying and selling businesses but at a much slower pace than several years ago. So like all the small business owners I work with, I have to work more for less. How long can these small business owner tread water until conditions improve- I see and talk with so many that are getting very tired.