The most recent BizBuySell Insight Report, which surveys business brokers and small business owners for information on small business sales as well as general economic information, has been released. As the economy continues to be uncertain, there are three main takeaways from the report, which we outlined below. You can also read the full report by clicking HERE.
Closed Transactions Bounce 4.8%, Sale Prices 11%, After Losses in Fourth Quarter
The first quarter of 2023 saw an uptick of business sales of nearly 5%. Although the current level of sales is still below the same quarter in 2022, the median sales price has increased 11% from 4Q2022. It appears that the market is recovering from the uncertainty of both inflationary pressures and rising interest ratees. In addition, the businesses that sold had higher revenues and cash flow than in the prior quarter, as consumers and owners have adjusted to the new economic reality. Good businesses continue to bein high demand.
Nearly One-Third of Owners are Speeding Up Exit Timelines Amid Economic Uncertainty
The businesses that were able to pivot during the pandemic and weathered the uncertainties that resulted are now ready to move on. Nearly a third of small business owners say they are now speeding up their exit timelines, either to retire, because of burnout, or due to continued economic uncertainty.
Our CEO, Diane Hartz Warsoff, was quoted in the report as saying she also expects more sellers to enter the market, “I think that a lot of business owners who were waiting to recover from COVID issues finally feel that they will get a better price for their businesses based on 2022 performance."
Buyers Are Leveraging Lower Pricing to Offset Higher Acquisition Costs
With higher interest rates making business purchases more costly, buyers are negotiating lower sales prices, which is putting some pressure on business values. These buyers also see the economy as an opportunity to get a good value and favorable pricing. According to business brokers who were recently surveyed, most believe the market favors buyers (42%) while nearly a third (29%) feel it is balanced and 17% believe it favors sellers. Interest rates likely play a strong role in these dynamics. The strongest buyer is someone who can pay all cash for a business, or mostly cash with some seller financing, as they can close on a deal much more quickly.
As always, having an experienced business broker who can help you manage the process can ensure you are getting top dollar when selling your business, as well as helping buyers navigate the purchase process. At the end of the day, at Transworld Business Advisors of Utah County, we want to be sure that everyone around the closing table is pleased with the outcome.
Schedule a NO-OBLIGATION consultation with one of our professional business advisors HERE or call us at (385) 342-4200 to learn more!
