Sacramento Area Businesses Sold Hits Three-Year High
The economic climate is strong for buying or selling a business in Sacramento, a recent report says. It was recently announced that the number of Sacramento area businesses sold on listing service BizBuySell hit a three-year high in the second quarter of 2017.
The median asking price of small businesses for sale in and around Sacramento in the second quarter of 2017 was $252,500. That’s up 27% from $198,995 in last year’s second quarter, according to a new report the San Francisco-based online business marketplace.
The second-quarter 2016 calculations were based on 218 Sacramento-area businesses listed, and the statistics are based on listing data rather than completed business sales.
Nationally, BizBuySell.com, reported a record number of businesses changing hands in the second quarter of 2017. They noted that a total of 2,534 closed transactions were reported in Q2 of this year. That’s a 31% increase from this time last year.
The year-to-date total of closed transactions is over 4900. On this pace, this year will easily surpass 2016, when the service saw a then record 3,775 transactions in the first half of the year. Businesses sold in Q2 grossed a median revenue of $490,000, an 11% increase from $441,331 in the second quarter of 2016.
Sellers Will Benefit from Market Higher Sales Prices and Fewer Days on Market
With more transactions occurring, it looks as though the sellers of those businesses are also benefiting from today’s market, which is exhibiting increasing sale prices and faster deals. This climate lets business sellers in Sacramento and across California to ask more for their businesses.
Research shows that nationally the median sale price in the second quarter increased from $199,000 in Q2 2016 to $229,000. Also, the median asking price for closed deals increased 12.6% to $250,000. The average sale to asking price ratio was steady at 0.92, but that statistic indicates buyer and seller perceptions are still in line.
Even with higher asking prices, sales are closing at a faster pace. For Q2, the median days on market was 168—a 5.6% decline year-over-year from 178 days. The second and fourth quarters are historically the busiest sales seasons of the year.
Seller Friendly Conditions Means Act Now
Interestingly, the seller-friendly climate is occurring with an increase in competition. Total listings increased 13% from last year, which adds to a trend that began in 2012.
For business owners considering the sale of their business, the research says it’s an opportune time to act.
As far as specific industries, restaurants showed major growth in the second quarter. Nationally, the number of closed restaurant transactions jumped 34% year-over-year, and the median sale price increased from $165,000 to $195,000. The median revenue of restaurants nationwide increased 7% year-over-year from $504,500 to $540,000, and cash flows increased 2% to $100,000.
In addition, franchises are increasingly being viewed as desirable acquisition targets. Established operating franchises for sale were 7% of active listings and 9% of closed deals in the second quarter of 2017. The median sale price of franchise businesses in Q2 was $232,500, slightly higher than the median $229,000 for all transactions.
2017 Outlook Remains Good
The second half of 2017 appears to point to continued growth in the business-for-sale market. Newly-listed businesses are seeing growing median revenues and cash flows. This indicates a continued strong supply of healthy businesses available to buyers. The median asking price of businesses listed for sale of $250,000 is unchanged from Q2 2016, which suggests that sellers are looking to close transactions quickly while the market is hot.
Thinking of Selling Your Business?
This link will provide a simple summary of the steps. If you would like more information, this link will allow you to buy and download a copy of Sacramento business advisor Andrew Rogerson’s book entitled, Successfully Sell Your Business. https://www.rogersonbusinessservices.com/book-successfully-sell-your-business
There are many steps to successfully sell a Sacramento business, and completing the due diligence and prepping for sale are just two of those steps. Click this link if you would like a one-page summary of the Many Steps to Sell a Business.
Contact Rogerson Business Services to speak with Andrew today about your plans for your daycare business. Call (916) 570-2674 or email info@rogersonbusinessservices.com.
