Despite a slow start, by halftime, 2019 has fully bounced back with more record breaking activity. Confidence in the market for 2019 remains steady for business brokers and business owners, though uncertainty for the years ahead has caused some slowing in buyer decision making, raising the national average for days on market. However, the bottom line remains - it is still a good time to buy a business because of the plentiful inventory, and sellers are still able to obtain a good return on their investment, though listing sooner than later should be top of mind.
Introduction.
During the second quarter of 2019, a total of 2,444 businesses exchanged hands as reported to BizBuySell, bringing the halftime total of businesses sold to 4,948. Compared to half time last year, this is a 9.6% drop in sales most likely due to political related uncertainties lengthening time to sell, as well as lingering effects from the shutdown earlier in 2019. Despite this recent attrition in sales activity, sales are still occurring at historic levels and sellers can remain excited about the value they can receive for their business on the market.
Both sides of the transaction are watching how election uncertainty affects a business’s fair market value. No matter what the future may purport, sellers and buyers can still come to the current market with confidence and receive the value they want to retire or invest and that the businesses available are sound, especially with the flow of baby boomer businesses.
General U.S. Market Highlights. The following are key metrics concerning the U.S. business for sale market in quarter two of 2019:
- 2,444 small businesses sold in Q2 2019, a negligible decrease from Q1’s 2,504, as reported by Biz Buy Sell, and likely due to the lengthening of the time on the market.
- Median revenue in Q2 2019 rose to $601,380, a substantial rise from Q1’s $540,000.
- Another growing number was median cash flow hitting $130,000 in Q2 2019, up from $120,000.
- Median asking price increased from $259,000 in Q1 to $299,000 in Q2 2019.
- Small businesses sold for a median price of $270,000, a record increase from last quarter’s $225,000.
- The average SDE multiple for the Denver-Aurora market reached 2.90, up from 2018’s average at 2.37, and 2017’s average at 2.50 (underlining Denver’s tendencies towards high valuations).
- Financial indicators remain very healthy, partially due to the influx of great baby boomer business listings, as well as high buyer activity and confidence in business valuations.
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Rachael Holstein has been the Marketing Manager for Transworld - Rocky Mountain since 2016. Her work experience has been largely focused on business development and marketing in business brokerage, finance, architecture, property management, and information technology. A long time resident of Cleveland, Ohio, she attained her undergrad from John Carroll University and her Master’s Degree from Cleveland State University. In 2013, she relocated to Denver with her husband, Joe, and her furry companions to explore the mile high lifestyle!
