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   According to BizBuySell’s Insight Report, 2024 saw a modest 5% increase in the overall number of businesses bought and sold. The year closed with 9,546 transactions, representing a combined enterprise value of $7.5 billion—15% higher than 2023.    Transaction activity steadily grew in the first half of the year, with a 10% gain in Q1 and a 5% increase in Q2 and Q3. However, Q4 experienced a slowdown as uncertainty surrounding the presidential election tempered activity. While the Federal Reserve implemented three incremental rate cuts in 2024—lowering interest rates from 5.25-5.5% to 4.25-4.5%—the impact on the business-for-sale market was limited. In fact, 60% of surveyed buyers reported no change in their purchase timelines due to the rate cuts. Meanwhile, 17% said the cuts encouraged faster action, and 23% remained unsure. As election-related uncertainty faded, many buyers signaled readiness to return to the market. Despite these challenges, median sale prices rose 3% year over year to $345,000, and deals closed faster, with median days on the market dropping by 3% to 168 days. Multiples also saw gains with the average cash flow multiple increasing by 3% (from 2.49 to 2.57), and the average revenue multiple up by 6% (from 0.63 to 0.67).  With market conditions stabilizing and buyer activity poised to pick up, 2024 showcased resilience and optimism in the small business transaction space.

Owning a business isn’t just about building and growing—it’s about being prepared for the future, including a potential sale. Planning for a sale from the start not only supports long-term success but also fuels growth. Many people believe that building, growing, and selling are separate stages, but they’re actually closely connected. The things that make a business grow—like improving efficiency, building strong teams, and boosting profitability—are the same things potential buyers are looking at. By thinking about growth and sale preparation together, you’ll set your business up for success in both areas. A few key questions to consider for both growth and sale preparation include: 1.  Is Your Customer Base Diversified? o   For Growth: A diverse customer base reduces the risk of losing a large chunk of revenue if one client leaves. o   For Selling: Buyers want to see a stable, diversified customer base to feel confident about the business’s future. 2.  Is the Business Too Dependent on You? o   For Growth: If the business is overly dependent on you, it can limit the ability take on new projects and affectively grow the business beyond its current capacity. o   For Selling: Buyers want to know the business will thrive without the original owner. If it’s too dependent on you, they’ll worry about its stability after you leave. 3.  Do You Have Documented Processes and Systems? o   For Growth: Clear, documented processes ensure consistency, make training easier, and help the business scale. o   For Selling: Buyers see documented systems as a big plus because they make the transition smoother and reduce risks of disruption. Even if selling isn’t on your radar, an exit plan ensures your business can adapt to changes and remain profitable Every day you spend growing your business should also be a day spent preparing for an eventual exit. The same factors that drive growth—like strong systems, a solid customer base, and a well-functioning team —also increase value, making your business resilient and ready for any future opportunities. Source: BizBuySell

   Recent data from BizBuySell’s survey reveals a shift in seller attitudes toward offering seller financing, reflecting a growing motivation to close deals despite market challenges. In 2024, 28% of sellers indicated they would consider offering seller financing, up from 24% in 2023. Simultaneously, opposition to seller financing has declined, with 40% of sellers now completely against the idea, down from 44% in 2023. This trend highlights a more flexible mindset, with more sellers keen to finalize transactions rather than wait on the sidelines.    The current economic environment, characterized by higher interest rates, has increased acquisition costs and pressure on business values. As a result, creating win-win deal structures has become critical to maintaining market momentum. Jon Pastoor, an M&A advisor at Calder Capital, observes, “With higher interest rates, we did see an effect of having more seller financing than in years past in order to reach a desired valuation. Seller sentiment seems to be picking up, and now with a potential drop in rates, I expect that to continue.”    Higher interest rates have made it more difficult for buyers to service debt, shifting the focus to deal structure and financing terms. John English, a Texas-based M&A advisor, notes, “It’s really more about debt service than purchase price. So, it boils down to rates, terms, or the willingness of the seller to finance themselves. We have crafted some highly creative deal structures, which makes us somewhat immune to other market forces.”    As buyers and sellers adapt to current market realities, the importance of flexibility and creative deal-making has never been more apparent. With a continued rise in seller financing, deals are moving forward, allowing both parties to navigate the challenges of higher interest rates while still achieving their goals. Source: BizBuySell Insight Report Q3 2024

BizBuySell’s Buyer-Seller Confidence Index, which surveys nearly 3,000 business owners and buyers on a 0-100 scale, revealed a rise in both buyer and seller confidence for the first time in years. Seller confidence increased 4 points to 50 from 46 in 2023, while buyer confidence increased by 2 points to 54 from 52. Currently, 54% of business owners feel confident they would receive an acceptable sale price if they sold today, while 43% expect an even higher price if they wait until next year. Katrina Loftin, managing partner and co-founder at M&A Business Advisors, explains how sellers and lenders are motivating buyers to move forward with deals: “We have definitely seen a shift from full price to a reduced price—typically around 10% less than asking. We are also seeing more buyers asking for seller financing at a rate lower than the SBA rate. Many banks have been offering incentives, so that has kept things moving.” Small business acquisitions continued to grow, increasing by 5% in the third quarter, marking the fifth consecutive quarter of growth. A total of 2,399 businesses were sold in Q3, with an enterprise value of $2 billion—20% higher than the same period last year. The largest acquisition sectors were service businesses (39%), restaurants (21%), retail (20%), and manufacturing (6%). Businesses sold in Q3 also reported stronger financials, with median revenue up 8% and median cash flow up 3.5% year-over-year. Despite the improvements in cash flow, median sale prices remained flat compared to last year and dropped 13% from the previous quarter’s record high of $375,000, settling at $325,000 in Q3. Robin Gagnon, co-founder and CEO of We Sell Restaurants, adds, “We have observed more sellers entering the market in Q3, and some are adjusting their pricing to reflect the realities of financing costs. Rather than holding off, many are motivated to close deals before any potential market shifts. While interest rates are a factor, they’re not halting transactions. Buyers and sellers are adjusting to the new normal, and deals continue to close when the financials make sense.” Source: BizBuySell Insight Report Q3 2024

Source:  BizBuySell

With more than 500,000 businesses changing hands every year, it presents an excellent opportunity for those who have a desire to own their own business.