SAN FRANCISCO -- BizBuySell.com, a leading online business-for-sale marketplace, has released its fourth-quarter 2011 data on how convenience stores and gas stations across the nation are selling.
During fourth-quarter 2011, there were 46 closed transactions for c-stores, compared to 40 during the same period in 2010, 61 for gas stations versus 28 in the previous-year's fourth quarter.
The current median asking price of c-stores for sale is $175,000. At the end of fourth-quarter 2010, the median asking price for a c-store was $299,500. The median sale price was $145,000, vs. $282,000 in the same period of 2010. The current median asking price of gas stations for sale is $510,000. At the end of fourth-quarter 2010, the median asking price for a gas station was $514,500. The median sale price was $433,196, vs. $464,500 in the pervious-year period.
Closed transactions are self-reported to BizBuySell by the representing brokers. Not all closed transactions are reported to BizBuySell, and it does not collect data from for-sale-by-owner transactions. Some transactions are excluded from example transactions due to confidentiality.
Sales of all types of small businesses were up slightly in 2011, continuing a trend of gradual year-over-year growth that began at the beginning of 2009, according to BizBuySell. For 2011, the number of small businesses reported as sold to BizBuySell.com across the United States was 6,703, an increase of 3.3% over the 2010 total of 6,486. This follows a similar 3% jump in closed transactions from 2009 to 2010.
The fourth-quarter 2011 c-stores listed with BizBuySell.com had a median revenue of $540,000, down from $765,000 at the same time during the previous year. The median cash flow--the money that comes out of the business over the course of a year--was $100,000, down from $112,966 in the comparable quarter in 2010. According to BizBuySell, c-store owners asked for, on average, a revenue multiple of 0.47 (changed from 0.65 year over year) and a cash flow multiple of 2.14 (changed from 3.28 year over year).
The fourth-quarter 2011 gas stations listed with BizBuySell.com had a median revenue of $1,628,816, up from $1,200,000 at this same time in 2010. The median cash flow was $139,050, as compared with median cash flows of $132,423 in the comparable quarter during the previous year. BizBuySell said that station owners asked for, on average, a revenue multiple of 0.44 (as compared to 0.68 year over year) and a cash flow multiple of 3.59 (changed from 4.51 year over year).
Click here to view c-store listings, and click here to view gas stations listings. Business owners interested in selling a business, click here.
The slight rise in closed transactions was accompanied by an equivalent 3.3% increase in the median selling price, from $150,000 in 2010 to $155,000 in 2011; however, median revenue for sold businesses was up more (6.7%) indicating that improved business performance contributed to increased sales activity. This also shows that business owners are adjusting their pricing expectations and selling their businesses for less relative to revenue and cash flow to get deals done.
"While 2011 continued to be a tough year for the nation's small-business owners, we were pleased to see that business performance is improving and more people are buying small businesses," Mike Handelsman, group general manager of BizBuySell.com and BizQuest.com said. "Helping this is the fact that business sellers are adjusting their value expectations, something that should continue to spur deals in 2012."
Transactions reported to BizBuySell.com showed that buyers are getting more for their money and that favorable market conditions continue to exist for buyers who have or can secure necessary funding. The average revenue multiple for small businesses sold in 2011 was .60, down 8.8% vs. 2010 and the average cash flow multiple was 2.36, down 8.2%.
The final quarter of 2011 showed similar results to the full year. Closed transactions were basically unchanged, from 1,699 in fourth-quarter 2010 to 1,696 in fourth-quarter 2011. This is encouraging, as the fourth quarter of 2010 saw increased selling activity due to the expected end of the reduced capital gains tax rates that were set to expire at the end of 2010 (note: late in fourth-quarter 2010, the reduced tax rates were extended until the end of 2012). In fourth-quarter 2011, businesses sold for a multiple of revenue of .60, down 8.6% vs. fourth-quarter 2010, while the multiple of cash flow was 2.39, down 2.3%. Meanwhile, the median asking price in fourth-quarter 2011 for small businesses sold dropped $5,000 year-over-year to $175,000.
"We are seeing improved small-business transaction activity driven, at least in part, by the fact that small-business owners are lowering prices to attract buyers," said Handelsman. "It's slowly becoming a better time to be a seller, but it's already a good time to be a buyer."
Fundamentals point to a continued slow-but-steady growth in the business-for-sale market in 2012 barring unforeseen global economic issues. Small-business performance is improving and sellers who have not been able to sell for the past few years should start to reach performance levels that make a sale possible. Added to this is the fact that sellers are becoming increasingly realistic about valuations to more aggressively seek a sale. Finally, underlying all of this is the very favorable long-term conditions of latent supply (e.g., the large number of U.S. baby boomers reaching retirement age) and demand that will continue to fuel transaction growth, especially as credit restrictions ease.
"The federal government and Small Business Association are continuing to focus on helping ease bank lending restrictions and providing more capital to the small business market," Handelsman said. "As more buyers and sellers begin to take advantage of these initiatives, we expect the gradual increase in business transactions to continue in 2012."
San Francisco-based BizBuySell lists more than 45,000 businesses in 80 countries for sale. The site also features a franchise directory as well as a business valuation tool. BizBuySell was founded in 1996 and acquired by LoopNet, Inc. in 2004. LoopNet operates the largest commercial real-estate listing service online, with more than $450 billion of property listed for sale.
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