Small business optimism and economic indicators remain high through mid-year
EDINA, MINN., – Economic indicators throughout the first half of 2017 remain at some of the highest levels since the recession, helping fuel a strong year for the business brokerage industry. Calhoun Companies, an Edina-based business brokerage firm specializing in small- to mid-sized companies, has seen confirmation of both increasing small business confidence and a robust business brokerage market in the Upper Midwest.
Locally, Calhoun Companies has seen year-over-year growth, particularly in the average sale price for businesses sold. In the first half of 2017, Calhoun Companies sold 28 businesses for an average sales price of $1.1 million. This time last year, the average sales price per business sold was slightly less than $1 million while in 2015 and 2014, it was $800,000 and $600,000 respectively.
“As the economy continues to recover, business owners are increasingly able to demonstrate improving financials, which helps them command a higher sales price,” explains Andy Kocemba, president and CEO of Calhoun Companies. “It also doesn’t hurt that a larger number of stable, financially healthy businesses are hitting the market than in previous years. The economy has finally recovered to the point where baby boomers who may have put off retirement due to the recession now feel confident that they can sell their businesses for a fair price. I expect to see this trend continue for the next several years.”
What’s happening in the Upper Midwest is a reflection of the strong brokerage market nationwide. According to the BizBuySell’s Q2 2017 Insight Report, the number of transactions is up 31 percent from this time last year, while the median revenue for businesses sold has increased by 11 percent. Business sales are also closing at a faster pace this year, down 5.6 percent from this time in 2016.
“We’re seeing a good balance in the marketplace. Both buyers and sellers are comfortable with the economic situation and confident this is the right time to make a transaction,” says Kocemba.
Barring any unusual circumstances, the small business economy is expected to continue to grow. Likewise, driven by a slew of baby boomers looking to retire, the sale and purchase of small businesses will proceed at rates not seen since the recession throughout the rest of 2017.
“We are looking at a strong, stable economy,” says Kocemba. “It’s a good time to be a small business owner, particularly in Minnesota. Business owners tell us that they think this year will be a growth year for their companies, and more excitingly, they also tell us they’re seeing increased revenue.”
NIFB Small Business Optimism Index:
Wells Fargo/Gallup Small Business Index:
A Majority of Minnesota Business Owners Tell Calhoun Companies: