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.”