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George & Company has spotted two growing trends as the small business market has taken back off over the last two years: the baby boomer generation has the post-recession confidence to sell their rock-solid businesses, and young entrepreneurs are lining up to buy them with better financing options as they step off the beaten track of corporate ladders and high-risk startups. Now is the perfect time to buy a baby boomers business as prices and purchasing power meet even.
Each year BizBuySell tracks financial indicators of how confident business owners are to sell their business. This tracks the amount of businesses for sale on the market, asking and sale price, and surveys, with the result being the Confidence Index. Using surveys from over 1,500 business buyers and sellers, the index tracks the current market for a business, with 100 representing the perfect market to buy and sell. For the last two years this number has stayed at 56, but in 2015 the Confidence Index is now 62 as baby bloomer become more confident they will be able to sell at the prices that can fuel their retirement.
“The consistently strong financial performance of small businesses bodes well for the future and is why owners are growing more confident in their ability to earn healthy sale prices upon exit,” said Bob House, Group GM of BizBuySell.com and BizQuest.com. “With buyers also finding more access to capital in today’s improved economy and lending environment, the market is set up for continually strong transaction levels.”
This increase in sales isn’t just due to more confident sellers: new buyers and stronger financing have also changed the marketplace in the last year. A growing trend amount young entrepreneurs is moving away from the tech company startups and corporate ladders to purchasing an existing business and buying into a pre-existing organization and client community. In the last four years the number of small businesses sold each year has risen to over 50% in 2015 according to BizBuySell. Just as businesses are fully recovering from the hard recession, so are banks, providing more favorable lending terms that allow the buyers and seller to meet pricing easier.
In Q4 of 2014 and through most of 2015, prices for small businesses are back up to record levels. As late as Q2 2012, businesses sold for two thirds of this year’s average price. This is due to two factors: an increase in sellers who are confident in the pricing of their business, and buyers who have the funds and investments needed to meet those prices. Both sides win as baby boomers can retire comfortably and these new entrepreneurs can purchase more profitable business.
Want to learn more about this trend? Contact George & Company, one of New England premier business brokers. We can tell you about the many business owners we’ve helped pass on their business and retire, as well as the new businesses owners we’ve helped find the perfect business for. From turnkey restaurants to manufacturing or at-home business, we’ve got listings full of businesses for under $1 million.