Prices down but multiples up on 2016 small business sales

BizBuySell report shows more Milwaukee-area transactions

Money

Last updated on July 2nd, 2019 at 09:09 am

Small businesses sold in the Milwaukee area during 2016 brought in an average cash flow multiple of 3.02, up 3.8 percent from 2015, according to a new report from online business sale marketplace BizBuySell. Median cash flow was $188,000, up 7.4 percent year-over-year.

Deal handshakeThe BizBuySell report analyzed 26 business sales in the Milwaukee-Waukesha-West Allis metropolitan statistical area, which includes Milwaukee, Ozaukee, Washington and Waukesha counties, during 2016. The included transactions are self-reported by the representing brokers, and not all closed transactions are reported by BizBuySell.

The number of Milwaukee-area businesses sold and listed on BizBuySell increased 52.9 percent year-over-year, to 26. Service businesses made up the greatest portion of the group, at 13.

The median sale price for the included businesses was $300,000, down 52 percent year-over-year, while the median asking price was $350,000, down 49.6 percent form 2015. But 23 percent of businesses analyzed were sold for more than $1 million.

Median revenue was $978,617, up 63.1 percent from the prior year. The average multiple of revenue was 0.65, down 15.2 percent from 2015.

Examples of Milwaukee businesses sold in 2016 were: a Waukesha County Rosati’s franchise for $275,000, at a 0.4 revenue multiple and a 3.44 cash flow multiple; a Milwaukee County optometry practice for $300,000, at a 0.6 revenue multiple and a 2.07 cash flow multiple; and a Waukesha County web design firm for $250,000, a 0.33 revenue multiple and 3.04 cash flow multiple.

Nationally, BizBuySell’s figures showed small business transactions were up 8.6 percent in 2016, to a total of 7,842. The median revenue for U.S. companies sold in 2016 was $449,462, and the median sale price was $200,000. The national cash flow multiple was an average of 2.3, while the revenue multiple was about 0.6.

“After several years of strong business-for-sale activity, it is great to see even more growth in 2016,” said Bob House, president of BizBuySell.com and BizQuest.com. “Not only are more small businesses changing hands, but healthier businesses put the new owners in a great position for continued success. This bodes well for the market, but also points to a bright future for small businesses overall.”

Read more economic data reports on the BizTracker page.

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Molly Dill, former BizTimes Milwaukee managing editor.

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