Review of BizBuySell's Q4 2022 Insight Report

Each quarter, the internet’s largest business marketplace releases data on all businesses sold in the past quarter.

BizBuySell released data on October 19th for Q3 2022.

Key takeaways:

• After five consecutive quarters of YOY growth, business acquisitions have slowed

  • Closed deals in Q3 2021: 2,283

  • Closed deals in Q3 2022: 2,237

• Median listing price and median asking price of listed businesses dropped

• Business owner (sellers) confidence dropped from 57 in 2021 to 46 in 2022

  • All-time low was 45 in 2020 over pandemic worries

  • Factoring into this low confidence: labor shortages: supply chain issues, rising interest rates, inflation, and recession fear

• Buyers, on the other hand, are feeling more confident about the market. 54, up from 48 in 2021

  • Decreased valuations spell opportunity for buyers

• Demand for restaurants is up with 14% more closed transactions than Q3 2021

• Rate hikes and inflation are weighing on the business market

A lot of people are worried right now. We are headed toward a recession if not currently in one. Small business sales are beginning to reflect that.

For potential sellers, here are the questions I’d be asking myself and my business broker: 

• If you’re not able to get the valuation you think you should for your business, do you need to sell right now? Can you wait it out and grow your business for a few more years?

• How recession resistant is your business? Some businesses thrive relative to others in recessions. The labor pool grows and salary demands drop. Recession resistant businesses can be attractive to buyers in a recession and in the wake of a recession. Your financials will look amazing relative to other industries.

• What I can do to prepare my business for sale knowing that for the next 18-24 months my valuations may be heading lower?

For buyers:

• How did this business or comparable ones do in previous recessions? How did it do during COVID?

• Do you have a range of valuations in mind at which you’d be thrilled to acquire a business? Think through this, have numbers in mind, and be prepared to act if a great deal comes up that meets your criteria.

• Are you able to hold off on acquiring a business for a bit longer? I don’t suggest attempting to time the market. But, if you’re worried about the current macroeconomic conditions, you may sleep better at night waiting a quarter or two for valuations to come down or see how things play out with interest rates. Just remember, there will never be a perfect moment to act.

Please let me know if you have any questions about this data. Also, I also love to discuss current SMB trends so please reach out with any thoughts or comments.

Source: https://www.bizbuysell.com/insight-report/