Abstract:
Small and entrepreneurial business activity worldwide continues to have a positive influence on economic growth and development. While there has been a plethora of studies on small business development, enhancement, and drivers for success, minimal research examines small business resales. Specifically, studies regarding the exit of small business owners through the selling of their business is sparse. More notable, no previous literature can be found concerning variables that optimize or impact the value of a small business resale. The purpose of this study is to identify variables that may have a positive influence on small business resale prices. Through non-linear analysis, the research identifies which variables most accurately predict an above average small business resale price. A dataset that examines 2,159 small business firms sold over a 10-year period is utilized to derive the study conclusions. Findings confirm that franchise firms receive a higher resale premium when compared with non-franchise firms. The analysis also supports that firms with greater than 25 years in business and that are engaged in Food/Restaurant (non-grocery) businesses receive a higher resale premium, as compared to any other firms in their respective categories.
