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Why the Market for Buying and Selling a Business is Improving

While the post-recession business-for-sale market has generally favored buyers, there are several signs that we’re experiencing a shift towards a more balanced market.

Early 2015 data shows an improvement in the overall financial health of small businesses and an uptick in the pace of small business transactions.

In fact, data from BizBuySell.com’s most recent Q1 2015 Insight Report showed a 6 percent year-over-year increase in business transactions, which marks two years of consistent financial improvement in the business-for-sale market.

Several factors contribute to market conditions that benefit buyers and sellers alike:

  1. Improving financial health

The financial performance of small businesses has been strong in recent months, which is allowing sellers to both ask for and receive higher prices for their businesses. The median asking price of a small business in Q1 was $225,000, up significantly from the $199,000 median asking price recorded at the same time last year. The median sale price in Q1 of 2015 also increased to $200,000, compared to $175,000 in Q1 of 2014.

Strong revenue and cash flow are also indicative of an improving small-business environment. The median revenue of small businesses sold on BizBuySell.com spiked in mid-2014 and has remained strong since, hovering just below $450,000.

Similarly, the median cash flow of sold businesses came in at $104,000, which is the highest median cash flow since BizBuySell started tracking financial data in 2007. These numbers make it easier for buyers to justify investments in new companies.

Conditions are especially favorable right now for those looking to enter or exit the small business retail or service sector. In Q1 of 2015, transactions within the service industry increased by 18 percent from Q1 in 2014. Sales of Midwest service companies in particular rose 63 percent from last year. The median revenue of retail businesses sold jumped from $437,783 in Q1 of 2014 to $537,500 at the same point in 2015, and the median cash flow also rose from $80,907 to $99,355.

Impressive financial indicators in these two sectors allow sellers to raise their asking prices and sell their businesses for more.

  1. Growing supply and demand

Recent BizBuySell surveys of buyers, sellers and business brokers credited the uptick in small business transactions to growing supply and demand in the business-for-sale-market. Retiring baby boomers, in particular, account for many of the new sellers in the market. More than 78 percent of business brokers surveyed attributed at least a quarter of their closed transactions to baby boomer sellers.

At the same time, as the national and global economies continue to rebound, potential business buyers’ personal wealth and willingness to take on new ventures has grown as well. Relaxed lending policies, a rise in financing options, and a booming stock market are all providing buyers with the capital and confidence needed to kick start their small business ownership plans.

Not surprisingly, these new buyers are coming from a younger generation now ready to start their entrepreneurial journey, typically by taking over from retiring owners. About 75 percent of business brokers in the aforementioned survey indicated the average buyer age to be between 30 and 49, while sellers were most likely to be between 50 and 64 years old.

  1. A more balanced market

This steady supply and demand of businesses is creating a balanced market, where both buyers and sellers receive value from transactions.

Sales price multiples for both median revenue and cash flow are trending upwards. The median revenue multiple for sold businesses in early 2015 was 0.63, up from 0.59 at the same time last year. The median cash flow multiple also grew slightly from 2.21 in Q1 2014 to 2.27 in Q1 2015. The current market landscape is expected to continue to drive interested buyers and sellers to the table throughout the remainder of 2015.

In general, the more balanced business-for-sale market offers benefits for buyers and sellers. Transaction activity has been consistently strong since the beginning of 2013, with the financial performance of small businesses being particularly robust in recent months. At the same time, more qualified buyers are ready to start their entrepreneurial journey and more sellers are eager to exit their small business and move on to the next chapter. Combined, there’s no better time than the present to capitalize on the market.

Bob House, General Manager for BizBuySell.com

Learn How a Business Broker Provides Guidance During The Transition Period Of Business

When an individual purchases an enterprise, the main priority is maintaining a smooth transfer between owners. This will reduce the likelihood of reduced revenue while the company is going through the transfer of ownership and change in procedures that the new owner may want to implement. The assistance of a Los Angeles business sales transition professional will be invaluable in the planning and transfer of the enterprises during and after the sale.

When a change-over period has been agreed to as part of the sale, it may last between a few weeks to several months. The transfer period will normally involve extensive training of new employees who will be coming on board with the new owner as well as training for employees that are retained. It ensures the new owner has the necessary time to learn the company from the previous owner. Because the first few months are very critical, the former owner will usually be available to provide assistance and information to new owners that will help them identify and resolve problems or gaps in that must be addressed.

A professional will evaluate price, prepare the sale, and help with negotiations. During the transfer they work with the new owner, employees and suppliers to help the company maintain its revenue and identify issues that may be creating a reduced income flow.

There are many things brokers suggest during the transfer period. They will work with the new owner on a plan that will allow for the changes desired in the plans and strategies with customer retention in mind. In most cases the professional will be experienced and knowledgeable in the industry and local needs in the community that will help the new owner expand his customer base. Another primary target during the exchange of ownership is the employees and how they will be used in the new enterprise. New buyers need to meet them, sit down, talk with them, and increase their morale.

Other recommended tips include asking as many questions as possible to the previous owner. Let them show how the company runs and how procedures are implemented. Also highly advocated is to stick with the current procedures already in place for record keeping.

A Los Angeles business sales broker assists individuals throughout the transition period when they purchase a new company. The transition period is important as it helps the enterprise operate with little interruption. They offer guidelines to follow so when the period is over, the new owner can successfully build a new and thriving enterprise.

LA is still a good place to do business. If you need professional assistance for your Los Angeles business sales, visit the website at https://www.henryweaks.com today.

Unlock Your Business Value With The Help Of A Business Broker

If you are intending to sell your business, contact a Los Angeles Business Sales broker to take you through the whole process, from beginning to end. A business broker is someone who acts as an intermediary between sellers and buyers. For you, the seller, he or she can make the deal less stressful.

Although it is customary for the seller to hire the broker and pay a pre-agreed commission from the proceeds of the sale, brokers often represent both parties. A broker is not the same as a business dealer. A dealer is someone who buys and sells companies for his or her own personal financial gain and therefore has a vested interest in the transaction.

A broker’s job is to bring a buyer and a seller together and assist them in negotiating an agreement that benefits both parties. One of the main advantages of letting a broker take charge of the sale is that he or she can utilize their experience when it comes to setting a good price for your company. Brokers know how to get the maximum valuation businesses.

If you use the services of a reputable business sales broker, you can be confident that the potential buyer will be reliable and have the financial resources to meet the price. The entire sale process will be monitored to ensure that everything takes place legally and that you will not lose out in any way. Less savory operators often fail to reveal some of the costs involved in selling a business.

When you first consult with a sales broker, the two of you will discuss where and how to advertise the sale of your company. Here again, he or she will know exactly which medium would be best suited for your type of business. Brokers have all sorts of contacts in their network and often know potential buyers who may be interested.

A Los Angeles Business sales consultant can also tell you exactly what documents you need for the sale to go through. These include tax clearance certificates, expenditure and income reports, and financial reports. Also, to protect your interests, your broker may suggest that you include some special clauses in the sale agreement.

If you are interested in Los Angeles business sales, you can get professional help from a specialized realtor. For additional information, you should visit the website at https://www.henryweaks.com .

Los Angeles Business Broker, Henry Weaks, Recognized As An Authority On Business Sales And Acquisitions

PRESS RELEASE: Los Angeles CA, 30 August, 2011 – Henry Weaks, Los Angeles business broker, is pleased to announce a single site location for Los Angeles business sales. Mr Weaks offers extensive experience in business ownership as well as the successful sale of his own company. He shares the lessons learned in all areas of business marketing with buyers and sellers in Los Angeles County and surrounding areas.

Weaks has successfully completed sales of businesses in nearly every industry. With a personal business background in industrial sales, business management, commercial real estate management and management consulting services, Weaks is qualified to do most of the tasks related to business marketing and sales.

For those who are purchasing a business, Weaks offers access to his list of prospective sellers. He represents buyers and sellers at every stage of the process from idea to key in the door.

Learn more about real estate transactions that include the sale or purchase of a related company. Each business has unique characteristics that enter into a business sale by checking out the web pages at https://www.henryweaks.com today. Members of the press and others may get answers to any questions about the details of this press release by contacting Weaks at the location below.

Contact Name: Henry Weaks

Company Name: Sunbelt

Address: 11 West Del Mar Boulevard, Suite 200, Pasadena, California 91105

Telephone Contact Number: 800.979.8570

Fax Number: (626) 584-2913

Email: henry@henryweaks.com

Website: https://www.henryweaks.com

Sunbelt Pasadena and Henry Weaks, professional in Los Angeles business sales, offers expertise in all areas of business sales and purchases.