Nearly seven in 10 (68 percent) respondents reported an increase in the number of small business transactions in 2013, and 83 percent felt there will be even more small business sales in 2014, according to a report on the buying and selling of small and midsize businesses (SMBs) by online marketplace BizBuySell.
While the business broker community is optimistic for the future, survey results also indicated brokers also realize the industry is still far behind the level of activity reported before the recession.
For example, 43 percent of respondents believed it will take more than two years before business transaction volumes return to pre-recession levels. Another 21 percent thought it could be accomplished in 18-24 months, while 18 percent optimistically predicted it would take 12-18 months. Nine percent believe transaction volumes will never return to previous levels.
“This year was certainly a big step forward for the business transaction market,” Curtis Kroeker, group general manager at BizBuySell and BizQuest, said in a statement. “After several years of gradual progress, there was a sharp spike in business transactions at the end of 2012 and it carried over throughout 2013. BizBuySell’s transaction numbers increased every quarter of the year and it’s good to see that the broker community noticed the same improvement.”
One of the reasons brokers are feeling confident about the growth of listed businesses in 2014 is the increasing number of Baby Boomers who are reaching retirement age and interested in selling their businesses. In fact, 50 percent of surveyed brokers estimated that more than half of the 2013 small business transactions were attributable to retiring Baby Boomers.
“Overall, brokers recognize the uncertainty of the economy, but still appear very confident that small business transactions will continue to rise in 2014,” Kroeker added. “As more buyers and sellers, including Baby Boomers, continue to flood the market, all the pieces point to another strong year in the business-for-sale community.”
Another 29 percent of respondents estimated 25 to 49 percent of 2013 sales included Boomer owners. While that is already a high number, brokers expect it to climb even higher in 2014—more than three-quarters (76 percent) of respondents said they believe the number of Baby Boomers who will sell their business next year will outpace the number of owners who sold their companies in 2013.
In addition, more than half (54 percent) of respondents who said more buyers were on the market credited increased confidence in the economic recovery. Another 19 percent believed buyers felt they were receiving strong value on their small-business purchases.
Brokers who saw more sellers on the market overwhelmingly (70 percent) felt that these owners had been waiting out the recession and were finally confident they could sell for a good price in 2013.