While the small business sales market continues to thrive, Colorado is seeing similar statistics to the rest of the nation. According to bizbuysell.com, the market has reached its highest volume since the recession in 2008. With these second quarter numbers, we have surpassed Q2 numbers of 2013 and expect the market to continue on this path and surpass the total volume of 2013 by year's end. Bizbuysell also reports that this past quarter is only 3% behind the record high of 2,098 transactions in Q2 of 2007.
So far in 2014, we have seen an 18% increase in the first quarter and 11% increase in the second quarter, from the same time period reported last year. "It is an exciting time in the market like we are seeing multiple industries thrive in Denver, the business market is no different," says owner Al Fialkovich, "we expect the market to finish strong in 2014 and continue to increase into next year."
Financial Performance Indicators
Also increasing is the financial performance of businesses for sale in Colorado and the nation. Both median cash flow and median gross revenue increased by 8% and 1.6% respectively, year over year. Median cash flow for listed businesses now sits at $100,000 and median revenue at $400,060. However, the ratio between asking price and sold price remains fairly steady.
Revenue multiples increased 8% from 0.58 to 0.63, while cash flow multiples have remained stagnant at 2.23 in the national market. Currently, the average cash flow multiple in our sold Colorado businesses is slightly higher at 2.28.
We continue to anticipate a strong market through the end of 2014 and into 2015. We are still very much in a demand market, however, the low multiples that continue after the recession are providing an excellent purchase value for buyers. We may see this situation reversed and multiples increase as buyers compete over the lower supply, however with the possible tsunami of sellers in the baby boomer demographic the market may not have time to work through this before the supply drastically increases.
Transworld Business Advisors of Denver is a team of Denver business brokers that helps visionary entrepreneurs buy a business, sell a business, or grow a business through franchising. If you are interested in having a conversation about what your business is worth, or how to sell your business you can contact us via email or phone at 720-259-5099.
*Market data and charts provided by Bizbuysell.com.