The business for sale market grew modestly in 2022 with closing transactions up 4.7% over 2021, and 19% above 2020 sales. However, sales are still 7% below the 2019 pre-pandemic levels. With increasing interest rates and inflation, momentum of sales began to cool in the second half of 2022 with a reported total of 9,054 transactions, still an increase over 2021’s total of 8,647 transactions. While the number of deals closing in 2022 was up, the median sale price dropped 3% to $315,000 over 2021.
Sellers have been feeling the impact of inflation and rising interest rates on business valuations as the cost of capital became an issue in 2022. Increasing capital rates began causing the downward pressure on business valuation multiples. The median revenue of businesses sold in 2022 was $650,000 a 2% drop from 2021, with the average revenue multiple dropping from .67 to .65 on business valuations. The median cash flow dropped 1% from 2021 ending 2022 at $148,765, with the average cash flow multiple dropping from 2.55 to 2.53.
Source: