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More than 63 percent of respondents reported a year-over-year increase in the number of small business transactions, a nationwide survey of business brokers conducted by BizBuySell, an online marketplace for buying or selling small businesses.
When asked to identify the factors behind the 2014 increase in transactions, brokers cited a greater number of interested buyers on the market as the primary reason for increased activity.
More than 45 percent of those brokers attributed gains in the number of prospective buyers to increased confidence in the economic recovery.
In addition, more than 70 percent of survey respondents said they believe more deals will get done over the remainder of 2014 than have already closed in the first few months of the year.
Among the reasons cited for optimism were seller price expectations becoming more realistic (27 percent), a continued improvement of the small business environment (20 percent), an increase in the number of buyers (19 percent) and an increase in the number of sellers (18 percent).
“Last year was an incredible 12 months for the small business transaction market, and it’s great to hear that brokers are seeing similar, if not better, activity so far in 2014,” Curtis Kroeker, group general manager of BizBuySell and BizQuest, said in a statement. “The increase in interested buyers is especially encouraging as it shows that more Americans are confident in the health of today’s small business environment.”
Although the forecast for the business-for-sale market is positive, brokers appeared aware of several issues that could slow the vibrant growth that has occurred over the past year and a half.
Nearly 30 percent listed the national debt and political gridlock as the top issue endangering the recovery, closely mirroring BizBuySell’s spring 2013 survey in which 32 percent of brokers cited the U.S. debt and political situation as the top factor that could slow the recovery.
The response consistency shows that, at least in brokers’ eyes, not much has changed over the past year in terms of government concerns.
“Overall, the business-for-sale market is in a great place right now–economic conditions and small business performance are improving and the fundamentals are right. However, it’s important not to get complacent,” Kroeker said. “Small business owners are looking to Washington to do what it can to foster a favorable environment for the small business economy. If that happens, we expect business transaction levels to remain healthy for the foreseeable future.”
Other 2014 dangers listed by brokers included small business tax rates (18 percent), a return to high unemployment (12 percent) and small business health care costs (12 percent).
The survey also indicated that while economic improvement has clearly benefited buyers and sellers in the business-for-sale market, seller financing remains as important as ever for funding and closing deals.