Falling oil prices favor retail businesses, a trend that's reflected in the latest business transaction data from BizBuySell.com, which analyzes small business selling and buying transactions in Houston on a quarterly and annual basis.
The median asking price for small businesses in Houston is up 17.2 percent year-over-year. Retail businesses took the largest share of closed transactions; 56 of 131 total business sales in 2014 were retail businesses, outweighing any other business category.
"Falling energy prices have got to be helping both sellers and buyers of retail businesses," said Bob House, general manager at BizBuySell.com.
The data reflects what investment advisers are predicting. Brian Thompson, market manager at J.P. Morgan Private Bank in Houston, told the Houston Business Journal in December that retail was likely a smart investment play for individual investors during the oil price slump.
2013 showed a similar trend favoring retail, but more manufacturing businesses were sold last year. There were only three manufacturing businesses sold in 2014, compared to nine in 2013. House said manufacturing businesses that stand to be negatively impacted by oil prices could potentially suffer a delay or derail a planned business transaction, which may explain the decline in manufacturing business sales.
"If there was anticipation of declining energy prices, that definitely could have derailed some business deals," said House.
Businesses sold for a median sale price of $187,500 in 2014, which on average was 93 percent of the asking price, the report said.
In 2013, the median sale price for businesses was $160,000, which was 92 percent of the asking price on average.
While prices are up, profitability is down, which keeps with the trend of the third quarter in 2014. The annual median cash flow of businesses sold in Houston was $89,188, where as the annual median cash flow of businesses sold in 2013 was $91,382. In October, House said the market was leveling out, and what had been a buyer's market before, thanks in large part to the financial crisis, is rebalancing toward the sellers.
Article at: Falling oil prices favor small retail business acquistions in Houston, says BizBuySell Annual Report - Houston Business Journal:For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.
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