The first half of the year was a busy one for sold businesses transactions. We haven’t seen these levels of activity since 2010. As the economy improves, many business owners are eyeing the exit. Not wanting the repeat the mistakes from our last recession, many of my clients recognize the time is now.
Of course, for every seller there is a buyer. I have outlined in previous articles that due to new SBA guidelines, buyers have more purchasing power than this time last year. Funding minimums are easier to meet. The result is a healthy and robust marketplace. There are deals to be had on both sides of the transaction.
My team and I dove deeper into the data and analyzed the first half of 2018 sales activity in North Florida.
We had a total of 357 Jacksonville area businesses listed during the first quarter. The second quarter remained just as strong with 356. Records indicate a combined 33 were sold during the first half of the year. While that percentage may seem low on the surface, it is quite strong when comparing the same quarters year over year.
Q1 +Q2 Businesses sold
What’s more interesting is the median asking price for these businesses remained relatively unchanged with $200,000 in 2017 vs. $199,850 in 2018. This suggests that the the asking price is not yet reflected due to our red hot economy,
Let’s break that down even further and look at the asking price of North Florida businesses in Q2.
Breakdown By Active Listing By Price
Price Number % of Total
$0- $550,000 27 8%
$50,001-$100,000 56 16%
$100,001-$200,000 99 28%
$200,001-$300,000 41 12%
$300,001-$500,000 48 13%
$500,001-$1,000,000 28 8%
The sold businesses maintained 91% of their asking price
*Data sourced from the Bizbuysell, a self reporting network of business brokers.
We are seeing no indication that this strong activity will cool in Q4.
We remind sellers of the lessons learned in the 2008 – 2010 era where the economy and prices were at all time highs only to come crashing down to earth along with nearly every other industry. While there may be even larger multipliers to enjoy in the future, a market correction is inevitable. We are cautious of Q3 and Q4 predictions, but the future will be clear soon.
It is good practice to understand what your business may be worth. While the information above is among all industries, your specific industry may have other factors that can increase or decrease the value of your business. Please remember most business brokers are willing to provide a free valuation to give you an idea what your business is worth even if you aren’t ready to sell today.
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