Sales of Businesses Near 2019 Levels But Inflation is a Concern
Business for sale transactions has shown steady growth in the first quarter of 2022 according to the latest BizBuySell Insight Report. Small business acquisitions rose to 24% over the previous year and just 3.7% shy of the first quarter of 2019, before COVID-19 shocked the market.
Small Business Sales Report – Q1 2022
Buying and selling activity has seen a steady rise since dropping to 39% during the second quarter of 2020 when businesses were shuttered during the pandemic lockdown. Moreover, median sale prices continue to sit at record levels, up 6% over the previous year to $345,000.
The first quarter of 2022 saw a majority of business owners (55%) deciding to sell their business citing retirement. A further 31% have cited the potential to receive a good price for selling their business now. Surprisingly, economic factors such as potential COVID spikes and recession fears factored very little as reasons for selling.
Among those surveyed, over 63% of them say they are over 50 years old and 30% say they are over 60 years old. In addition, more than a third (37%) admit to planning to sell their business within two years. Indicating a shift where more and more Baby Boomers are looking towards retiring.
“The number of sellers this year is steady compared to 2021. But the average age of our seller is now higher (closer to 70 versus 65 years of age). Seller’s health issues (or their spouse’s) are increasingly driving the decision to sell.”, said Robert A. Flynn, Managing Member of United Brokers Group.
Demand for Profitable Businesses Remains Strong
Despite economic uncertainty, businesses continue to sell at a fast pace, with the median number of days on the market down 5% to 181 days- slightly ahead of the 185 days in 2019. This is because some 25% of buyers say they see emerging trends or opportunities they want to capitalize on, while an equal number (25%) believe there are a variety of good businesses to choose from.
Service-related businesses that have been relatively less impacted by the pandemic remain the most sought-after businesses. Some 35% of buyers today say they are seeking a service business. Over the past five years, the number of service businesses changing hands has grown to nearly half (45%) of all reported business transactions, compared to 37% in the first quarter of 2017.
Image: Depositphotos
This article, “Sales of Businesses Near 2019 Levels But Inflation is a Concern” was first published on Small Business Trends