The Booming Business for Sale Market in The Greater Toronto

Just like the Real Estate market, the business for sale market seems to be booming these days in Toronto. As a business broker in Toronto I can feel that fewer business owners are currently selling their businesses while the number of business buyers has increased dramatically in the past few months and continues to increase.

On the one side, this rapid increase in demand for businesses for sale could be explained by the following reasons:

1. Business buyers have retrieved confidence in the economy thanks to the hope for economic recovery. Perspectives for the future seem much better than before and buying a business today is certainly a smart way to take advantage of this recovery.
2. Business valuations are currently relatively low both because of lower multiples and because of lower profits made by businesses in 2008 and 2009. Multiples will certainly increase if the recovery is confirmed as well as profits. Prices will increase as a result.
3. A large number of laid-off employees are seriously looking to business ownership as a an alternative to finding a new job.
4. The general growing trend of corporate outsourcing is becoming more prevalent so that traditional employment is been replaced by contract work. Buying a small business that fulfills this corporate need is an attractive alternative to traditional employment.

On the other side, the decrease in supply of businesses available for sale could be explained by the following reasons:

1. A large number of small business owners expected to sell their businesses and retire cannot do so because their retirement funds have taken a serious hit due to the recent declines in the stock market. These owners are postponing the sale of their business for some more few years until their retirement funds recover.
2. Business owners prefer to wait some more years until the economy fully recovers so they can sell their businesses at a much higher prices.

These are some of the reasons that explain the increased current demand and decreased supply of businesses for sale that will ultimately lead to and increase in the prices for small businesses.