Business brokers anticipating record-setting year for sale and purchase of small businesses
EDINA, MINN., – After several years of sluggish growth for the nation’s small business economy, 2017 looks to finally deliver on the long-anticipated recovery. Already, small business optimism is skyrocketing, reaching levels that haven’t been seen since the early 2000s, leading small business owners to begin making plans for expansion and investing money in their companies. This increased confidence and economic growth is also expected to fuel a record-setting year for the sale and purchase of small businesses, which already hit pre-recession levels in the third quarter of 2016. Calhoun Companies, an Edina-based business brokerage firm, is already seeing indications of a strong small business brokerage market in the coming year.
According to the National Federation of Independent Business (NFIB), just days into 2017, small business owners are expressing record levels of confidence, pushing the Small Business Optimism Index to its highest level since 2004. The report also showed a 38-point jump in the number of small business owners who expect business conditions to improve and a 12 percent increase in the number of owners who believe that now is a good time to expand. Likewise, the Uncertainty Index dropped by 15 points in December as small business owners began to feel more stable about the economic and political outlook for 2017. The latest numbers show that only 12 percent of respondents are unsure if the economy will improve in the next six months, down from 23 percent in November. The optimism is largely spurred by the anticipation of a better tax and regulatory environment for small businesses.
“Small business owners are finally feeling confident after multiple years of uncertainty and a sluggish recovery,” said Andy Kocemba, president of Calhoun Companies. “Many owners are finally feeling comfortable enough to invest in much-needed equipment, improvements, and staff.”
As the small business economy continues to see marked improvement, so does the business brokerage market. While the industry experienced year-over-year growth recently, including in Minnesota where Calhoun Companies saw not only an increased number of transactions, but also more substance, value-wise, in the transactions, it is poised for yet another record-setting year in 2017. According to BizBuySell’s December nationwide survey of business brokers, 79 percent expect the number of transactions to increase in the new year due largely to policy changes, an increasing number of owners looking to sell and improving small business financials. In addition, nearly half of business brokers anticipate that the price of businesses sold in the next year will rise. These predictions may be driven even higher if baby boomers begin to retire and sell their companies in the coming year.
“The brokerage industry has long been anticipating a flood of baby boomer-owned businesses to hit the marketplace, but it just hasn’t materialized,” said Andy Kocemba. “The recession and ensuing slow recovery have delayed the trend and left baby boomers hesitant to retire. As the economy continues to stabilize and grow, we except more members of that generation to start actively thinking about retirement and begin to make plans for stepping away from their companies.”
As baby-boomers begin to sell, they will likely encounter a marketplace eager to purchase stable, proven businesses. 2017 may even become a sellers’ market, a trend that has been materializing for the past several years as businesses owners began to finally receive sales prices closer to their original asking price towards the end of 2016.
About Calhoun Companies
Calhoun Companies is a leading independent business brokerage serving the Twin Cities area and the
Upper Midwest since 1908. Specializing in business valuation, buying and selling businesses, and commercial real estate, the team at Calhoun confidently connects buyers and sellers through a successful transaction. Current listings and additional information included on the Calhoun Companies website.