An aging domestic population is anticipated to result in more business owners selling their businesses.
New York, NY (PRWEB) March 07, 2014
Despite a damaged macroeconomic climate following the recession, an increasing penchant for small business owners to sell their companies has improved the performance of the Business Brokers industry over the five years to 2014. “Business brokers operate as intermediaries during the sale of a small business, providing due diligence, valuation, advertising and negotiation services to downstream clients,” according to IBISWorld Industry Analyst Stephen Hoopes. In contrast to merger and acquisition advisors, business brokers focus on companies that are valued at less than $2.0 million, often finding the ultimate buyer within a 20-mile radius of the company's location. According to the latest available survey data from BizBuySell, an increasing number of willing buyers and sellers of small businesses and more realistic sale price expectations for current owners have benefited the industry substantially in recent years. Consequently, industry revenue is expected to increase at an annualized rate of 3.0% to $961.4 million from 2009 to 2014.
Industry operators typically earn 10.0% of the ultimate sale price in the form of commission. At least 70.0% of the ultimate buyers of companies brokered by industry operators are individuals rather than existing business owners. Indicative of the average operator's focus on small transactions for commissions, an estimated 40.0% of industry operators are sole proprietors. “In recent years, optimism surrounding the business-for-sale market has increased among business brokers,” says Hoopes. For example, according to BizBuySell, 57.8% of surveyed business brokers expected the landscape for the industry to improve in 2013 compared to 2012, with their optimism rewarded as revenue increased by an expected 3.9% and 1.5% in 2013 and 2014, respectively.
Improvements in a range of macroeconomic variables, including the number of domestic businesses, are expected to cause the industry's transactions to consistently grow. Moreover, the aging of the domestic population is anticipated to increase the willingness of business owners reaching retirement age to sell their businesses, to the benefit of industry commissions. Yet, given the only moderate level of legislation surrounding business brokers, potential introductions of industry-specific regulation with the potential to damage the industry's commission structure and average profit margin have become increasingly probable.
For more information, visit IBISWorld’s Business Brokers in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry act as an intermediary between buyers and sellers of small businesses. As part of the process, business brokers estimate the value of a business, advertise the sale without disclosing the business' name, handle negotiations and facilitate others aspects of the sale (including due diligence).
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