More businesses for sale in June quarter
Wednesday, July 11, 2007/
There are more businesses for sale now than all year so far, and most of them are smaller concerns. It could be just seasonal, but you never know…
In the process of compiling the June edition of the BizExchange Index we have come across some interesting statistics about the state of the market.
The number of businesses for sale (compiled from print, online and broker advertisements) is up by 33% on the previous quarter. And the number of businesses sold on BizExchange jumped in May and June, outstripping the number of new listings.
Some advisers say it’s not unusual for the number of sales to increase either side of the end of financial year, so we will monitor this to see if it is a seasonal pattern or part of a longer trend.
The other standout in the data is the abundance of retail business (42% of listings) and accommodation, cafés and restaurants (27% of listings) currently on the market. Retail businesses represent just 20% of all businesses, and accommodation, cafés and restaurants represent just 3%. So they are over-represented in the market.
This is due in part to the fact that some businesses advertise on multiple sites; for example, hotels and motels are often promoted on property sites as well. The other reason is that retail and hospitality have traditionally had higher churn rates with some businesses changing owners several times in a decade, where as a professional consultancy may be sold once in a lifetime.
With this in mind it is perhaps not surprising to find that the most under-represented industry segment is business services – just 4% of listings but representing 25% of all businesses.
The overall numbers for both are up, which may be due to the increasing number of baby boomers looking to sell out as the approach retirement.
The initial indications are that ratio of businesses for sale by size is consistent with the overall number of businesses. The majority of businesses are at the smaller end with only a few with a turnover above $15 million.
The full results will be released in a couple of weeks. The BizExchange Index is published every quarter and is available free from the BizExchange website.
Andrew Kent is a director of BizExchange, an independent marketplace for business for sale or seeking investment. BizExchange has a directory of independent advisers and business brokers and information on valuations
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