BizBuySell.com's Third Quarter 2018 Insight Report reveals record highs in small business financials, allowing sellers to ask and receive more money than ever recorded

BizBuySell.com, the Internet's largest business-for-sale marketplace, reported that sale prices of businesses sold in the third quarter of 2018 reached new highs. The record sale prices are directly related to stronger business financials which also hit new levels in Q3. With buyers able to offset increasing prices by acquiring healthier businesses, the result is a well-balanced market. Full results are included below, in BizBuySell's Q3 2018 Insight Report, which aggregates statistics from business-for-sale transactions reported by participating business brokers nationwide.

Small businesses sold for a median price of $249,000 in the third quarter, up 10.7 percent from the same time last year and the highest amount since BizBuySell started collecting data in 2007. The median asking price grew 7.6 percent to $269,000 which translates to a 93 percent sales-to-ask ratio, up slightly from the 92 percent reported in Q3 2017. The strong sales-to-ask ratio likely means that buyers and sellers are seeing eye-to-eye in terms of value. While owners are getting top dollar for their business, buyers are inheriting businesses with a better financial footing. Primarily fueled by a healthy economy, businesses sold in Q3 had $530,995 median revenue and $116,229 median cash flow. Those financial totals are up 7.4 percent and 2.8 percent respectively year-over-year.

With a business-for-sale playing field of equal benefit to both buyers and sellers, more businesses are changing hands than ever before. A total of 2,685 closed transactions were reported in the third quarter of 2018, a 3.7 percent increase from the same time last year. This keeps 2018 on a record breaking pace for the number of businesses sold.

Businesses added to the market in the 3rd quarter continue to display impressive financials, which should be great news for buyers. The median revenue and cash flow of listed businesses grew 4 percent and 5 percent respectively year-over-year. Q3 listing data provides a similarly positive outlook for owners looking to sell. The median asking price of business listed for sale in Q3 reached $279,000, up 3.3 percent versus a year ago. Assuming a similar 93 percent bid-to-ask ratio, business listed in Q3 are on pace for a median sale price of $259,470, which would be the highest amount in BizBuySell history.

BizBuySell's 2018 Buyer-Seller Confidence Index supports the idea of an equally beneficial market to both buyers and sellers. In fact, buyers are slightly more confident in today's business-for-sale market than last year. While seller confidence remains unchanged compared to 2017, 60 percent of owners said they are confident they would receive an acceptable sales price if they exited today.

"The foundation of small business is about taking advantage of opportunity," said Bob House, president of BizBuySell.com and BizQuest.com. "To be in a place where both buyers and sellers are able to capitalize without the other party losing out is fantastic and a testament to the strong will of entrepreneurs."

Tariffs and Elections Take Center Stage as Market Aims to Continue Record Pace

Even as small business asking prices have continued to rise, buyer demand has not swayed thanks to the attractive financials absorbed in an acquisition. However, as witnessed during the Great Recession, small business success is greatly tied to the performance of the overall economy. Any event that might have a positive or negative effect on the economy should be closely watched by those looking to enter the market. President Trump's tariff policies are an exact example of this.

According to a recent BizBuySell Study, 30 percent of owners said they will be negatively affected by the tariffs. Yet, 76 percent of owners still approve the tariffs, including half of those believed to be negatively impacted. Perhaps business owner support is due to their plan to pass tariff related cost increases to customers, which was the number one response from owners. Buyers however are not as agreeable. Just 30 percent of business buyers support the tariffs. Twenty-three (23) percent of buyers went so far as to say that if the tariffs remain in place, they would be less likely to purchase a small business. Regardless of sentiment, should tariffs extend for a long period, the increase in expenses is likely to impact profitability and in turn, sale price.

November's elections are another factor to keep a close eye on. In addition to buyer versus owner differences, political alliance is another divisive factor affecting tariff support. Ninety (90) percent of Republican business owners support the tariffs versus just 27 percent of Democratic owners. Any reshaping of party lines and related regulations could cause both buyers and sellers to change their plans.

Overall however, with Baby Boomers fueling a strong supply of financially healthy businesses hitting the market, BizBuySell data shows a market that should remain active for some time.

"We've now had a few record-breaking years in a row in terms of transactions and it appears 2018 will be no different" said House. "The fact that small businesses are selling for the highest price to date and demand hasn't slowed shows how much confidence both sides have in today's market."

About the BizBuySell.com Insight Report

BizBuySell.com is the Internet's largest marketplace for buying or selling a small business, with over 1.4 millionmonthly visitors. The company releases its BizBuySell.com Insight Report on a quarterly basis, reporting changes in closed transaction rates, valuation multiples and other economic indicators for the small business transaction market. Closed transactions are reported to BizBuySell.com on a voluntary basis by business brokers nationwide. To find a qualified business broker in your area, visit http://www.bizbuysell.com/business-brokers/.

NOTE: For the most recent statistics, please see the latest BizBuySell Insights Report