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Sold! Sales of Small Businesses Continue to Rise

The number of small businesses changing hands is on the rise, new research finds.

Overall, 66 percent of business brokers experienced an increase in the number of small businesses bought and sold in 2015, compared to just 14 percent who saw a decrease in such activity levels, found BizBuySell, an online marketplace for buying and selling small businesses.

Business brokers attribute the uptick in activity to a combination of reasons, including an increased number of interested buyers, a better small business environment highlighted by improved revenue and profit, and a surge in the number of owners looking to sell.

An increase in the number of baby boomers wanting to retire is also contributing to the increased number of small businesses being bought and sold, the research found. The study revealed that 77 percent of brokers attributed at least one-quarter of their closed transactions to baby boomers, while 46 percent said more than half of their sales came from retiring baby boomers.

“While the market has been strong for several years now, brokers have yet to experience any decline in number of quality listings,” Bob House, group general manager of BizBuySell.com and BizQuest.com, said in a statement. “With sellers growing more confident in their valuations, buyers gaining additional access to capital and the small business environment continuing to improve economically, the market is set up for strong transaction levels in 2016.”

In all, 73 percent of the business brokers surveyed said they expect transaction activity to increase even more next year.

“It’s promising to see that brokers are optimistic that the market will continue to improve in 2016,” House said.

Moving forward, continuing health care and minimum wage changes could also help spur on more transactions. This year, 20 percent of the brokers surveyed said they had clients sell their businesses due to higher health care costs, while 8 percent had clients sell their businesses largely due to a minimum wage increase or potential minimum wage increases.

“It will be important for small business owners to keep an eye on these issues and decide how upcoming changes could affect their exit strategy,” House said.

Currently, most brokers said they view the small business transaction landscape as a buyer’s market. Specifically, 52 percent of those surveyed said the market favors buyers, while 24 percent said it’s balanced. Just 19 percent said the market favors sellers.

The study was based on surveys of 240 business brokers from across the United States.

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