Q2 2024: Analyzing Active vs. Sold Business Listings in New York City Metro

We're diving into the latest data on business sales and active listings for the New York City Metro area, as provided by BizBuySell. Understanding these trends is crucial whether you're looking to buy or sell a business. Let’s break down the current market and see how it compares to previous periods.

Sold Business Sales Data (2024 Q2)

In Q2 2024, the market saw 116 businesses sold with a median sale price of $467,500 and a median asking price of $515,000, resulting in an average sale-to-asking price ratio 90%. The median revenue for these businesses was $872,276, with a median cash flow of $200,000. These figures indicate a healthy demand, as businesses are selling relatively close to their asking prices.

Comparison to Previous Quarters

• 2024 Q1: Saw slightly fewer businesses sold (109) with a much lower median sale price ($260,000). The sale-to-asking price ratio remained consistent at 90%, but median revenue and cash flow were significantly lower.
• 2023 Q2: 98 businesses were sold, similar in number to the current quarter but at a lower median sale price of $250,000. The sale-to-asking price ratio was lower at 88%, reflecting more room for negotiation.

The trends show a clear recovery and growth in sale prices and revenue from 2023 to 2024, with Q2 2024 outperforming previous quarters in terms of median sale price and revenue, although maintaining a consistent sale-to-asking price ratio.

Active Business Listings Data (2024 Q2)

There were 3,607 active business listings analyzed in Q2 2024. The median asking price was $390,000, which is lower than the median asking price for sold businesses in the same period. The median revenue for these active listings was $700,000, with a median cash flow of $167,175.

Comparison to Previous Quarters

• 2024 Q1: The number of listings was almost identical (3,605), but the median asking price was slightly lower at $375,000. The median revenue and cash flow were consistent with Q2 2024.
• 2023 Q2: There were 3,721 listings with a median asking price of $350,000, reflecting a continuing rise in asking prices up to 2024.

The data highlights a gradual increase in asking prices for active listings from 2023 to 2024, which suggests growing seller confidence and a potentially appreciating market.

Cash Flow Multiples Analysis

The average cash flow multiple for closed business sales in Q2 2024 was 2.75, indicating that businesses sold for 2.75 times their annual cash flow. This is a higher multiple compared to previous quarters, reflecting increased buyer confidence and willingness to pay a premium for cash flow. For instance, Q1 2024 had a cash flow multiple of 2.35, and Q2 2023 had a multiple of 2.08.

In contrast, the average cash flow multiple for active listings in Q2 2024 was slightly higher at 2.90, which shows a consistent trend compared to Q1 2024 (2.87) and Q2 2023 (2.76). This suggests that while sellers are optimistic and setting higher asking prices, the market's willingness to pay these premiums is yet to be fully tested through actual sales.

?Key Takeaways

• Market Health: The business sale market is showing strong health with higher sale prices and revenues in 2024 compared to 2023.
• Seller Confidence: Increasing asking prices for active listings indicate rising confidence among sellers about the value of their businesses.
• Buyer Interest: The sale-to-asking price ratios suggest that buyers are willing to pay close to the asking prices, reflecting strong interest and competition in the market.
• Cash Flow Multiples: Higher cash flow multiples for closed sales suggest that businesses are selling at a premium, indicating robust buyer confidence and market demand.

Whether you're looking to buy or sell, keeping an eye on these trends will help you make informed decisions and understand the market dynamics better.

This post was originally published at ericimendelsohn.com