Market for small businesses cools further, report says

The market for small businesses cooled further during the third quarter, as fallout from trade wars made companies look less appealing to buyers.

That’s the finding of a quarterly report analyzing small business sales released by BizBuySell.com, an online marketplace for companies. BizBuySell.com counted 2,454 small businesses sold during July-September, which was down 8.6% from 2,685 sold in the same period last year. That followed declines of 9.6% in the second quarter, 6.5% in the first quarter and 6% during the last three months of 2018.

Some owners, who were considering selling, are now holding off because they’re concerned they may not get a good sales price for their company. Also, tariffs raise costs and therefore threaten a company’s profitability, making a business less attractive to a potential buyer. That and fears about a recession are limiting what buyers are willing to pay for companies.

The median sales price for a business edged up just 0.1% during the third quarter from a year earlier, according to the report, which was based on a survey of small business brokers across the country. Asking prices rose 3.3%, but owners found they had to take less money than they wanted to complete a sale. 

Some small business owners are reluctant to put their companies on the market, while others are thinking more seriously than in the past about what they need to do to make their companies more attractive. 

Despite the data, some experts say it’s still a good time to be buying small businesses because of declining interest rates. Read the full story.