Seller Market Update – August 2017
By: Larry W. Metzing
Summer greetings. I hope that 2017 is turning out to be a prosperous and healthy year for all. Just checking in to let you know that I am still here… and I am still doing the deals! My delayed communication to everyone results from some intense focus to close several transactions thus far this year. So far, Indiana Business Advisors is having the best year we have had in a while, with an unusually high concentration of mid-market business sale transactions already in 2017.
So how does the market look for selling a business, you say? Well, according to BizBuySell, the number of small business transactions hit record levels in the first half of 2017 (our experience certainly reflects the same). In their Insight Reports published in the Second Quarter of 2017 they report that Businesses sold in Q2 showed an 11 percent increase in transaction gross revenue over the second quarter of 2016. Median cash flow also increased 10.5 percent year-over-year. At the same time, the average multiple of cash flow increased 5.1 percent year-over-year to 2.34.
According to the Small Business Administration (SBA) Weekly loan reports, while the number of SBA 7(a) loans processed in the US decreased in 2017, the transaction revenue grew to approximately $6.8 Billion in 2017 from $6.0 Billion in 2016. The number of SBA 504 loans grew from 4,905 in 2016 to 5,388 in 2017, with revenue increasing from approximately $3.9 Billion to $4.3 Billion.
It looks like small and mid-sized business transactions are alive and well! What is of more interest, the return on investment enjoyed by sellers has increased. If you or a client of yours has been considering selling a business, now is an excellent time to take a snapshot of what a sale transaction would look like in this current very friendly seller’s market. I would be glad to facilitate an exit strategy or business valuation discussion. Click on the link below to start the conversation.