Numbers resemble pre-pandemic levels!
Small business acquisitions reached a familiar milestone in the second quarter after growing 5%
over the past year and 3% from last quarter, according to BizBuySell's Insight Data, which tracks and analyzes U.S. business-for-sale transaction and sentiment from business owners, buyers, and brokers. A total of 2,448 businesses were reported as sold in the second quarter of 2024, representing an enterprise value of $1.9 billion, which is 20% higher than the same time last year.
Service Sector Prices Jump 17%, Manufacturing 31% as Retail Sector Slows
42% of Buyers Say Performance Most Important, Followed by Growth and Location
53% of Business Owners Say Trump Will Have Best Impact on Small Business
After falling 13% in 2022 amid rising interest rates and red-hot inflation, transaction volume has made a strong rebound and now matches 2019's pre-pandemic levels. At the same time, demand has pushed the median sale price up 25% year-over-year to a record high of $375,000, as buyers continue to focus on businesses with strong financial performance. The median revenue of businesses sold in Q2 2024 grew 4% year-over-year and median cash flow grew 7%, respectively.
This dynamic of moderate growth and heightened demand for premium businesses is occurring as inflation is cooling, with the Bureau of Labor Statistics reporting that the Consumer Price Index (CPI) dropped to  3.0% while unemployment rose to 4.1%. With interest rates expected to be cut relatively soon, this opens the path for a boon to an already rising business-for-sale market. According to BizBuySell's recent small business survey, 24% of business buyers say they are waiting for interest rates to decrease before making a purchase.
Market Outlook
For the second half of 2024, the business-for-sale market is expected to continue growing at a modest pace. While costs remain high, businesses are adapting to this new environment and finding ways to maintain profitability. In fact, 37% of owners expect their business value to increase over the next year.
At the same time, key economic indicators signal rate cuts on the horizon, with many analysts expecting an announcement during the September Federal Open Market Committee meeting at the latest. Under these conditions, buyers can expect to find great opportunities with increasingly favorable terms.
It's also looking more and more like an ideal time for sellers to exit their business. The presidential election is just around the corner and Donald Trump is widely favored in the small business community. Of business owners surveyed, 53% say they believe he will have the best impact on small business, compared with only 14% to Joe Biden and 3% to Robert F. Kennedy, Jr.
"[The election outcome] will be interesting. We expect rates to start declining regardless of who wins. If we move into a situation where taxes may increase, we should see more sellers either rush to the market or wait another 4 years. If the opposite occurs, the market should remain steady. Either way, there are still a lot of baby boomers that will retire in coming years which should keep the market steady," said Loftin.
While politics and economic soundbites occupy the media headlines, ultimately, the main market driver comes down to individual circumstances. Seventy-eight percent (78%) of owners indicate personal reasons will decide their time to exit versus just 22% letting market conditions decide their fate. Furthermore, retirement remains the number one motivation for selling as indicated by 45% of soon to be exiting owners. While the impact of the election can be debated, the reality that 10,000 Baby Boomers retire each day is likely the most important element to fuel the market forward.
Source: BizBuySell
Adam Debussy
BizBuySell
Comments