This Industry report from Bizbuysell.
One year after the onset of the pandemic, entrepreneurs continue to flock to high performing businesses causing median sale prices to jump 30% compared to Q1 of 2020, according to BizBuySell’s Insight Report, which tracks and analyzes U.S. business-for-sale transactions and sentiment of business owners, buyers, and brokers.
The $350,000 Q1 median sale price is the highest since BizBuySell began collecting the data in 2007 as are the $680,020 median revenue and $147,752 median cash flow for reported transactions. The latter figures represent a 15% and 8% YOY increase respectively. In addition, higher multiples tacked on a premium to standard performance-based prices, with the average revenue multiple increasing 5% and cash flow 7%.
The current market conditions reflect a dynamic where businesses performing well during pandemic are scarce in the marketplace, while those impacted stay on the sidelines until financial performance improves. In fact, most business brokers (58%) say impacted owners are likely to rebuild value compared to 27% of brokers who say owners are more likely to sell at a discount.
Matt Baas of Small Business Deal Advisors explains, “While we’ve seen owners take both sides of this, it looks like most owners would like to rebuild business value prior to exiting. If successful, this will help owners to maximize business valuation and overall marketability.”
As a result of this supply shortage, transactions declined 12% during the 1st quarter compared to the same time one year ago.