Business for Sale Market Rebounds in Q1 2023 After Year-End Declines Amid Rate Hikes and Inflation
Volume of small business acquisitions moved up 4.8% in the first quarter of 2023 over Q4 of 2022 and after three consecutive quarterly declines. While transactions are 10% below the previous year, median sale prices are up 1.4%, and 11% over the previous quarter, according to BizBuySell’s Insight Report, which tracks and analyzes U.S. business-for-sale transactions and sentiment from business owners, buyers, and brokers.
| Quarter | Sold Listings |
|---|---|
| 2017 Q1 | 2,368 |
| 2017 Q2 | 2,534 |
| 2017 Q3 | 2,589 |
| 2017 Q4 | 2,433 |
| 2018 Q1 | 2,679 |
| 2018 Q2 | 2,705 |
| 2018 Q3 | 2,685 |
| 2018 Q4 | 2,288 |
| 2019 Q1 | 2,505 |
| 2019 Q2 | 2,446 |
| 2019 Q3 | 2,454 |
| 2019 Q4 | 2,342 |
| 2020 Q1 | 2,225 |
| 2020 Q2 | 1,481 |
| 2020 Q3 | 2,063 |
| 2020 Q4 | 1,845 |
| 2021 Q1 | 1,951 |
| 2021 Q2 | 2,049 |
| 2021 Q3 | 2,283 |
| 2021 Q4 | 2,364 |
| 2022 Q1 | 2,412 |
| 2022 Q2 | 2,342 |
| 2022 Q3 | 2,237 |
| 2022 Q4 | 2,063 |
| 2023 Q1 | 2,162 |
This recent quarterly uptick is a positive sign that the market may be on the rebound as buyers and sellers adjust to new economic conditions. After rapid growth in the first half of 2022, with transactions up 24% in Q1 and 14% in Q2, the market stalled amid rising inflation and a series of interest rate hikes before dropping 13% in Q4.
Furthermore, businesses sold in Q1 2023 reported higher financials. Median revenue rose 6.7% over the previous year and median cash flow rose 2.8% respectively, reaching their highest levels on record, indicating consumer spend patterns are adapting to inflation. This also points to buyer demand for businesses that continue to perform well.
Median RevenueMedian Cashflow2017201820192020202120222023$0$100K$200K$300K$400K$500K$600K$700K$800K
| Quarter | Median Revenue | Median Cashflow |
|---|---|---|
| 2017 Q1 | $518K | $117K |
| 2017 Q2 | $490K | $116K |
| 2017 Q3 | $508K | $113K |
| 2017 Q4 | $500K | $113K |
| 2018 Q1 | $507K | $120K |
| 2018 Q2 | $526K | $120K |
| 2018 Q3 | $531K | $116K |
| 2018 Q4 | $519K | $119K |
| 2019 Q1 | $540K | $117K |
| 2019 Q2 | $601K | $130K |
| 2019 Q3 | $555K | $125K |
| 2019 Q4 | $554K | $122K |
| 2020 Q1 | $600K | $130K |
| 2020 Q2 | $600K | $137K |
| 2020 Q3 | $630K | $135K |
| 2020 Q4 | $640K | $142K |
| 2021 Q1 | $688K | $148K |
| 2021 Q2 | $600K | $141K |
| 2021 Q3 | $672K | $150K |
| 2021 Q4 | $691K | $150K |
| 2022 Q1 | $656K | $151K |
| 2022 Q2 | $698K | $150K |
| 2022 Q3 | $624K | $145K |
| 2022 Q4 | $644K | $144K |
| 2023 Q1 | $700K | $155K |
David Strejeck of Sumtis LLC in Maryland sees more deals closings after delays in SBA loan processing, as well as an increase in sellers ready to move forward. “I did see a slight increase in the first quarter of 2023 versus 2022. A part of that was the SBA process seems to be taking a bit longer (some deals were delayed to Q1). I will say so far for the first quarter of 2023, the listing side has definitely increased. I believe there are a few factors to take in consideration, one being that some of the seller owners are at that stage in their life cycle, where they are ready to call it a day. On the other hand, I believe some of the sellers were waiting to get their numbers back up post COVID.”
Online activity is also picking up as buyers continue to seek out opportunities. BizBuySell’s online marketplace of active listings shows a noticeable increase in online traffic, with the number of monthly visits up 27% over the previous year.
“After experiencing pandemic business/job disruption, I believe more people have taken a harder look at what they want to do in their working lives. I think this has spurred the increase in buyers looking at listed businesses,” said Darrell Gustaveson of Murphy Business Sales of Boise, Idaho.
Source: bizbuysell.com