Days on market not a factor when buying a business

October 10, 2014

Days on Market

In residential real estate a key factor in the perceived value of a piece of property is “days on market” – sometimes abbreviated as DOM. In Business Brokerage DOM is not a major factor. In fact, in Florida our MLS does not even track how many days a particular business has been listed.

Here is why. Say you have a 4 bedroom 2 bathroom house with a pool in a nice neighborhood. One year from now it’s still a 4br/2ba house with a pool and in a nice neighborhood (unless something has changed drastically). Since the property for sale has not changed dramatically its failure to sell must be an indication of a problem. Most likely it has been overpriced or is undesirable for some other reason. Certainly that will be the perception.

But a business is a different matter. A thriving business this year might be a bust next year. A business barely threading water this year might be thriving next year. Customers can be lost or added, new products released, market conditions can change, contracts gained or lost. A million things can happen to change the value of a business. Because of this it follows that the DOM is not key factor in the desirability of a business. Instead buyers look for the latest financial trends and will respond positively to a business on the upswing.

Anthony John Rigney is a business broker and the owner/founder of Quorum Business Advisors, LLC. If you are considering selling your business, please reach out for a free consultation. Call him at 904-725-7677