Get Started: Companies seeking workers drive business sales
HIRING BY BUYING
The strength in the market for small and mid-sized businesses is being driven by companies’ interest in finding talented workers.
That’s the finding of a third-quarter survey of 334 business sales brokers released Monday by Pepperdine University’s Graziadio School of Business and Management and two industry groups, the International Business Brokers Association and the M&A source.
Ninety percent of companies that sold for between $5 million and $50 million were bought by businesses looking to expand, the survey found. And expansion is one way for a business to acquire new talent. That was up from 60 percent in a survey taken during the second quarter.
“Talent scarcity is driving M&A activity,” David Ryan, an adviser with Upton Financial Group, a business broker, said in a statement. “For businesses looking to grow, acquisitions present an efficient way to secure a trained and established labor force.”
Business sales slumped during the recession, but began soaring at the start of 2013 as the economy improved, according to BizBuySell.com, an online market for small businesses. Sales have remained strong since then.
The survey of brokers found that retirement was the biggest reason why owners sold during the third quarter, followed by owners wanting to take advantage of a new opportunity or because they were suffering from burnout. Baby boomers wanting to retire have also been cited as the reason for the big jump in sales BizBuySell.com has recorded.
Buyers of smaller companies tended to be motivated by the need for a job. Fifty-two percent of people who bought companies priced under $500,000 were in effect buying a job — the business was going to give them a living. The percentage of buyers looking for a job fell to 39 percent for companies between $500,000 and $1 million, and to 23 percent in the $1 million to $2 million range. Among larger companies, only 13 percent needed to find a living.
Companies that sold for up to $1 million tended to be restaurants or personal service businesses like hair salons. Above that threshold, the top-selling businesses were manufacturers.
Many small businesses are using video to market themselves, whether they include it in their website or on social media networks like YouTube, Facebook and Twitter. Owners looking for an introduction to using video can get one at an online workshop sponsored by SCORE, which offers free counseling and training to small businesses. The workshop will be held Tuesday, Dec. 5 at 1 p.m. Eastern time. You can learn more and register at http://bit.ly/2keckRb .