Business Sale Transactions: 2014 Second Quarter Report, Colorado

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 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 at 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.

Future Outlook

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 reverse and multiple 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. 

Why You Should Use a Business Broker to Sell Your Business

When business owners are looking to transition out of their business for a variety of reasons – relocation, retirement, and change of career – they are presented with multiple options in regards to the future of their company. Should they close? Transfer to an employee or family member? Or sell? And if they sell should they do it on their on or through a business broker.

If the choice is to sell, a relationship with a business broker can provide an easier transaction with multiple and higher dollar offers. No matter what the business owner decides, they should work with someone who is an experienced business professional and active in the business brokerage community. In Colorado, business brokers should have active real estate licenses and be affiliated with our state brokerage association, Colorado Association of Business Intermediaries (CABI) as well as the International Business Brokers Association (IBBA).

For more helpful tips on finding the right business broker to help sell your business, read this article by Inc. Magazine, “Finding the Right Business Broker for your Business.” It includes helpful information from industry experts, including Transworld’s CEO, Andy Cagnetta.