Many small business owners pour their hearts and souls into the companies they’ve built and wouldn’t part with control of them for the world, while others may get offers that are simply to good to not consider. It seems that, these days, a larger number of entrepreneurs fall into the latter category.
Recent data from the online marketplace BizBuySell.com shows that in the third quarter of the year, some 1,685 small business owners sold their companies to someone else, up from just 1,189 in the same period a year earlier, according to a report from the Wall Street Journal, which works in partnership with the site. While that was down from both the first and second quarters of the year, the figure also marked the third straight annual increase in the third. Often, those selling their companies were older small business owners who had turned an eye toward their golden years.
“People who wanted to retire and feel like they missed the boat are absolutely seeing their businesses come back to the point where they’re saying they’re not going to miss it this time,” said Andy Cagnetta, chief executive of Transworld Business Advisors LLC, told the newspaper.
Interestingly, the sector in which businesses changed hands most often was the service industry, with retail stores and restaurants not far behind, the report said. Separate data from BizEquity.com found that the median value of these companies was $1.3 million in the third quarter, and that was up significantly from the level of $860,000 just a year earlier.
Another potential reason for the eagerness among current owners to get out of their companies now is that costs are generally on the rise, the report said. The average annual lease for a small business rose to $23.38 per square foot of office space in the third quarter, up from $22.94 during the same period in 2012. Similar upticks were also noted within the retail and industrial industries, though their costs tended to be far lower on a per-square-foot basis.
Owners worried about rising costs may want to consider their other options before selling. That could include finding more affordable small business insurance coverage – including those for workers’ compensation or general liability insurance – as a means of reducing costs. In some cases, getting these less expensive policies can save businesses thousands of dollars per year.