BusinessesForSale.com ran a survey of business buyers, sellers and agents earlier this year, and after compiling the results we are pleased to make them available to our users online. Please click on the links to download a PDF of the survey you want to read.
A generally positive but also fragile and uncertain economic future is the outcome of a survey of thousands of business buyers, sellers and business brokers from around the country by BusinessesForSale.com.
The survey points to many prospective business buyers wanting to capitalise on low credit rates and a perceived buyers’ market for business opportunities.
By far the most common reason given by the 81% who believe it’s the right time to buy a business is that continuing economic uncertainty promises low prices, with about half (49%) citing this reason.
There are signs that the credit drought is easing, although it still seems to be harder to obtain credit in the US than in many other developed countries. Of those surveyed in the US, 37% said it was difficult to obtain credit, compared to a global average of 26%, with 23% saying they had found it relatively easy.
However, the rebound from recession could cause owners of high-quality businesses to re-evaluate their options, as one broker observed: “Extremely low interest rates deter business owners from selling their businesses as they can nowhere near replace the income they derive from their businesses when they come to investing the capital in the proceeds of sale.”
The businesses-for-sale market has always been a useful economic indicator. Previous research from BusinessesForSale.com has shown that an increase in both business values and the quality of businesses has often presaged an economic improvement a few months later and vice versa.
While brokers generally believe the number of businesses on the market has grown in the past couple of years, a growing mismatch between buyer and seller expectations has developed, particularly regarding valuations.
Some business owners see economic green shoots as justification for charging a higher price, while buyers see continuing turbulence as a licence to drive prices lower. A hopeful indication that things really are starting to pick up is that fewer buyers are dropping out of the buying process than this time last year – 53% versus 65.6%.
Sixty-eight percent of buyers in the US believe that sellers’ asking prices are too high, while only 32% feel they are about right. Seventy-five percent of business brokers reported that their clients had to accept lower than their initial asking price, a slightly lower proportion than the world average.
Forty percent of brokers reported a surge in sales of service businesses, the largest rise posted, bucking the trend seen worldwide where food was the top sector, (though food accounted for the second steepest sales rise in the US, 30.6%). Retail and, strangely, food again, were the biggest fallers, 52.6% and 44.7% respectively, in the US. There’s a clear discrepancy with demand here because these sectors are very much in demand among buyers, as 29% and 28% respectively are interested in retail and food businesses – the number two and three picks. Evidence points to a shortage of quality businesses in these sectors.
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