The number of small businesses that were bought and sold in 2014 reached a high point since the 2008 meltdown, according to the recently released year-end Insight Report. Since 2007, the report has tracked sales and listing prices of small businesses across the United States based on data related to approximately 45,000 businesses for sale and those that recently sold.

(Click for larger view of chart above.)’s Bob House attributed the market’s 2014 performance to several factors:

  • Improving small business financials
  • Increased number of qualified buyers
  • Retiring Baby Boomers
  • Seller confidence
  • Higher asking and sale prices

A total of 7,494 closed transactions were reported in 2014, an increase of over six percent from the 7,056 transactions in 2013, which was the previous record, said House. On average, 2013 and 2014 transaction totals are up 55 percent over the recession and recovery period from 2010 through 2012.

Better business performance leads to better prices

Insight Report data indicates that small businesses are performing at a higher financial level. The median revenue of small businesses sold grew from $405,905 to $417,562 in 2014, and the median cash flow rose from $97,000 to $100,000.

Improving financials gave sellers more leverage during the sales process, leading to a slight uptick in median sales price as well, from $180,000 in 2013 to $185,000 in 2014. Financial multiples grew modestly as the average revenue multiple rose from 0.59 to 0.61 and the average cash flow multiple moved from 2.21 to 2.24. This indicates that while sellers are getting slightly higher returns out of their businesses, buyers continue to receive good value on their purchases.

These improved financial numbers are allowing sellers to both ask for and receive more money for their businesses. The median asking price for a small business grew to $224,990 in Q4 2014 after sitting around the $200,000 mark for much of 2013 and early 2014. Asking for more money appears to pay off as the Q4 median sale price stands at $200,000, a strong increase from both Q4 of 2013 ($175,00) and Q3 of 2014 ($189,000).

Look for continued growth in 2015

Even with all the transaction activity occurring in 2013 and 2014, there still appears to be strong supply and demand in the pipeline for 2015, according to’s House. “As the economy continues to strengthen, small business financials are likely to keep improving, and sellers will be more confident that they can successfully exit their businesses.”

Brokers in BizBuySell’s survey agree as 82 percent expect transaction activity to increase in 2015 and more than 45 percent believe final sales prices will rise in 2015 compared to just 12 percent who believe they will decrease. And while Baby Boomers were active in 2014, brokers are confident they will remain a driver of supply. Seventy-eight percent of brokers said they expect a larger number of Baby Boomers to exit their businesses in 2015 than did in 2014.

“The number of small business listings on and continue to grow as more owners begin the process of selling,” House said. “While the peak of this activity is unknown, all the fundamentals signal another strong market in 2015.”

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