One year after the onset of the pandemic, aspiring entrepreneurs continue to flock to high performing businesses. This resulted in median sale prices to jump 30% compared to Q1 of 2020, according to BizBuySell's Insight Report, which tracks and analyzes U.S. business-for-sale transactions and sentiment of business owners, buyers, and brokers.
Sold businesses report 15% year over year increase in median revenue as stronger businesses drive transactions
Aspiring entrepreneurs continue to look for high quality businesses to purchase, so those with higher revenues are selling for a premium. The key factor impacting the higher prices is that those businesses who have performed well during pandemic are scarce in the marketplace. Businesses who were negatively impacted by COVID are waiting until their financial performance improves. In fact, most business brokers say impacted owners are likely to rebuild value in the coming year.
Sales prices boom 30% amid rising multiples fueled by record demand
Interestingly, the businesses in the following industries fared the best in the last quarter: landscaping and yard service businesses, cleaning businesses, auto repair shops, and website and ecommerce businesses. Fast food and limited-service restaurants also fared well, as they were able to pivot and provide extensive take-out and delivery options during COVID.
Survey data hints demand may soon shift to more affordable acquisitions
Although many “pandemic-proof” businesses sold for a premium, buyers surveyed appear to be losing interest in paying top dollar for a business. Most buyers say they are looking for businesses that are only maintaining pre-pandemic performance, and some would even prefer to pay a discount for an impacted business versus seeking one exceeding pre-pandemic levels.
2021 Overall Small Business Market Outlook
One big thing that COVID has changed is how people view their careers. Small business ownership has become a haven for individuals seeking security in times of uncertainty. We have been speaking with many people who have been laid-off or otherwise are looking for a change that wish to do so by purchasing a small business.
As the country continues to re-open, buyers may expect businesses benefiting from the pandemic to return toward pre-pandemic performance. Conversely, a return to normal will provide non-essential business owners who survived COVID an incentive to cash out as earnings return to normal levels.
The main takeaway? NOW is the time to get your business ready to sell, as there are buyers out there who are hungry to purchase! CONTACT US today to schedule a no-obligation consultation.