According to the BizBuySell.com Insight Report, the number of closed transactions nationwide for all types of businesses in the third quarter of 2010 was 1,117, exactly equal to the 1,117 closed transactions [image-nocss] reported for this same time period a year ago. This number is a slight 1% increase compared to the 1,106 closed transactions reported for Q2 of 2010.
For c-stores, however, only 35 sites were sold in Q3 2010, compared to 44 the previous year and down from 53 in Q2 2010.
"This data suggests that the business-for-sale marketplace has flat-lined," said Mike Handelsman, group general manager for BizBuySell.com and BizQuest.com. "Unfortunately, the signs of recovery that we saw earlier this year are stalling out in the second half of 2010."
The market remains significantly down compared to pre-recession numbers, with the number of closed transactions down 47% from the high of 2,098 reported to BizBuySell.com in Q2 2008.
Specific to c-stores, according to BizBuySell.com: The median sale price of stores in Q3 2010, was $260,000, up $10,000 from the previous quarter, but down from an 18-month high of $285,000 in Q1 2010. The median revenue of stores sold in Q3 2010 was $745,000, the highest since one year ago. And the average purchase multiple of cash flow was 4.29X, again the highest level in the past 18 months.
"Although we do see a slight increase in transactions over last quarter, it looks like a recovery is going to be much slower in coming than we thought," said Handelsman.
The main concern for business brokers and business owners looking to sell continues to be the lack of available credit for small-business acquisitions. A recent BizBuySell.com survey of the nation's business brokers confirmed this issue, with 49% of brokers reporting the lack of available capital as the primary driver of lower transaction volumes. Other factors reported by brokers were seller unwillingness to lower their asking price (19%) and lack of qualified buyers (18%).
Seller financing and recent government initiatives may have averted a larger crisis in the business-for-sale marketplace, but another boost is still needed to promote a true recovery. "The Small Business Jobs Act, recently signed by President Obama to provide up to $30 billion in increased lending by small banks, may help provide this needed boost to restart a recovery in the marketplace," said Handelsman.
Brokers, however, are not optimistic that conditions will improve in the near future; 85% of business brokers surveyed by BizBuySell.com do not expect transaction volumes to return to pre-recession levels until at least 12 to 18 months from now.
The BizBuySell.com Third Quarter 2010 Insight Report includes business-for-sale metrics for the total United States and for more than 70 major metropolitan areas. The current Insight Report comprises data from 1,117 closed transactions and over 30,000 active listings.
Click herefor more information.
Based in San Francisco, BizBuySell is an online business-for-sale marketplace. It currently has an inventory of more than 47,000 businesses for sale.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.