For-Sale Ups & Downs

Published in CSP Daily News

BizBuySell: 2Q station, store median asking price, revenue down, cash flows up or steady

SAN FRANCISCO -- BizBuySell.com, a leading online marketplace for business-for-sale listings, has released its second-quarter 2011 data on how convenience stores and gas stations across the nation are selling.

While closed transactions across all business types showed a healthy increase in second-quarter 2011, median revenue of the businesses sold decreased by about 6%. C-stores and gas stations were no exception.

For the quarter, there were 53 closed transactions of c-stores and 43 closed transactions for gas stations.The current median asking price of c-stores for [image-nocss] sale is $170,000. At the end of second-quarter 2010, the median asking price for a c-store was $320,000.

The second-quarter 2011 c-stores listed with BizBuySell.com had a median revenue of $675,000, down from $720,000 at this same time last year. The median cash flow--the money that comes out of the business over the course of a year--was $100,000 last quarter, remained consistent with median cash flows of $100,000 last year. According to BizBuySell, c-store owners will typically ask for, on average, a revenue multiple of 0.37 (changed from 0.55 year over year) and a cash flow multiple of 2.28 (changed from 3.39 year over year).

The current median asking price of gas stations for sale is $474,000. At the end of second-quarter 2010, the median asking price for a gas station was $800,000.

The second-quarter 2011 gas stations listed with BizBuySell.com had a median revenue of $975,000, down from $2.6 million at this same time last year. The median cash flow was $160,821 last quarter, as compared with median cash flows of $157,200 last year. According to BizBuySell, gas station owners will typically ask for, on average, a revenue multiple of 1.08 (as compared to 0.55 year over year) and a cash flow multiple of 4.61 (changed from 6.18 year over year).

The data is based on more than 500 c-store businesses and more than 500 gas stations listed at BizBuySell.com. The listings that drive these statistics include listings from local business brokers, as well as "for sale by owner" listings that have been listed by the business owner without the assistance of a business broker.

Click hereto view c-store listings, and click here to view gas stations listings. Business owners interested in selling a business, click here.
BizBuySell's Second Quarter 2011 Insight Report on business succession trends--which aggregates business-for-sale transaction data provided by participating business brokers--showed continued improvement in business succession activity, as overall closed transactions increased 8% from 1,106 in second-quarter 2010 to 1,198 in second-quarter 2011.

"We've been anticipating an upward trend in the business-for-sale market as more profitable businesses start to become available for sale," said Mike Handelsman, group general manager of BizBuySell.com and BizQuest.com. "This trend has begun to show in recent quarters and the second-quarter results accelerate the trend. As capital availability continues to gradually improve we expect the market to continue to strengthen throughout the remainder of the year."

The number of closed transactions reported in second-quarter 2011 is the most BizBuySell.com has seen since fourth-quarter 2008. According to Handelsman, the increase is likely a result of latent sellers who were waiting for improvements in business performance.

"In tough economic times, many sellers are 100% focused on survival and performance improvement," said Handelsman. "But now their efforts have begun to pay off and their businesses are becoming profitable again. As such, many are finally ready to put their business on the market."

While closed transactions showed a healthy increase in second-quarter 2011, median revenue of the businesses sold decreased by about 6%. In second-quarter of last year, median revenue was reported at $361,274, while this year it was reported at $340,000; however, Handelsman notes that this decrease suggests that smaller businesses are being sold, not that the health of businesses is decreasing.

"While median revenue has decreased slightly, median cash flow and median sale price figures have both remained virtually flat," Handelsman explains. "So, smaller, profitable businesses are likely being sold and helping to drive the increase in closed transactions."

While it is still a tight capital market, the lending environment does seem to be improving, said BizBuySell. Moreover, more sellers are recognizing the key role that seller financing can play in the current market to help them differentiate their business for sale and close a transaction. The combination of these factors is having a positive impact on overall transaction volume.

"Businesses and business buyers are only now getting to the point where they can borrow money," Handelsman said. "We still expect it will take time for transactions to reach pre-recession levels, but headway is being made."

San Francisco-based BizBuySell currently has an inventory of more than 45,000 businesses for sale, and more than 785,000 monthly visits. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry's leading franchise directories. BizBuySell was founded in 1996 and acquired by LoopNet Inc. in 2004. LoopNet operates one of the largest commercial real-estate listing service online, with more than $450 billion of property listed for sale and 6.7 billion square feet of space for lease.