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IS THERE A FITTING BUSINESS FOR SALE NEAR ME?
“Can I find a suitable business for sale near me?” is an easy question which often leads to a complicated answer. This is a prime example. With a question like this, there are some immediate questions:
- What do you consider suitable?
- Is there a precise requirement, or are you looking more broadly?
- What are your financial limitations in terms of your budget?
- What would you consider ‘near’ to you?
- Are you just interested in limited businesses?
In practice, some business buyers and sellers focus on a particular sector, size, and locality. For the next person seeking to buy a business, the scope may be much broader over a wider region.
Given that, what is the best starting point? Firstly let’s consider the overall opportunity using data we can agree on.
How Many Active Privately Held Businesses Are There?
This is a question for which we can give a relatively accurate figure. Based on data released by the Department for Business, Energy and Industrial Strategy, the number of private sector businesses in the UK at the start of 2019 was 5.9 million. This had increased from 5.7 million in 2018. Given a further 54 months have passed, it should have increased in 2020 – 2025.
We can see that almost 4.5 million of these businesses have no employees. This can be true of companies with only Directors involved, but also of companies that are used by individuals, for example for IR35.
Therefore the true number of saleable companies is all those with one or more employees (1.4m) plus a small proportion of the remaining 4.5 million. It is reasonable therefore to assume the true figure is below 2 million and above 1.5 million.
Another way of calculating is by looking at business ‘Legal Form’. From the same research provided by the government we can see:
- 3.5 million sole traders
- 2.0 million actively trading companies
- 400 thousand ordinary partnerships
This would also provide a figure in the range stated, therefore we can estimate the total number of viable actively trading businesses at 1.75 million.
How Many Businesses are Currently Advertised For Sale near me?
This is a more difficult question to answer, at least with full certainty, however again we can provide reasonable estimates.
Firstly, let’s look at all the businesses which are publicly for sale. Five websites are listing a wide range of companies for sale. From sampling, we can see that there is considerable overlap.
The largest website claims 26,000 businesses currently for sale across the UK. Yet, on closer investigation, it only has 22,500 and then almost half of these businesses are property, not companies. Many are micro-business as well as sole trader businesses. The companies may just about be saleable, but certainly not of interest to the proper corporate buyer. It would, therefore, be reasonable to assume about 10,000 unique businesses for sale.
The second-largest claims 13,500 businesses, but as soon as you filter by asking price of over £100k then it halves. And it overlaps by about 25% with the first site. So, it would be fair to add a further 5,000 to the initial 10,000.
The third largest site has just under 5,000 businesses for sale. Again it overlaps with the first two websites and also contains several micro-enterprises.
Taking into account the law of diminishing returns, and recognising that there are about 30-40 websites, then it is reasonable to assume that the total number of publicly available businesses for sale is in the region of 20,000.
Is that All the Opportunities to Acquire an SME Business?
The larger the business, the lower the likelihood of sale. Many businesses represented by sales advisors and corporate finance firms are not listed on business sales websites. Generally, they are being marketed in a different way – more directly to trade buyers and investment portfolios.
Putting a single number in front of the common question: “Is there a business for sale near me?”. We know that there are about 400 sales advisors and about 200 corporate finance firms in the UK. Of these 600 firms, they normally hold about 30 mandates at any time. Let’s assume half of their mandates are not public, that would leave about 9,000 ‘non-visible’ businesses for sale in the UK.
This gives a total of 29,000 privately held companies for sale at any one time, which accounts for approximately 1.7% of all active trading SME businesses.
So, How Many Businesses Are for Sale Near Me?
After this analysis now we can return to your criteria. Break it down and you should be able to research a ballpark figure based on your preferred region, size (financials) and sectors. If you need help with that, then talk to the team: 01962 609 000 and we can give you an idea of the total opportunity scope.
Whatever the number you discover, our rule of thumb has always been 2%. So if you have a list of 200 potential companies, we expect about four of them will be available.
That’s the most reasonable guideline on how many businesses are for sale near you. However, what you may need to optimise your chances of success is an off-market strategy. Book a meeting with one of the team, and we can talk through how and where we can help.
