Small business sales to close 2021’s top pre-pandemic levels

Business News

The BizBuySell Insight Report for 2021 reveals small business acquisitions picked up in 2021. So much so, sales beat pre-pandemic levels in the 4th quarter. This bodes well for the coming year. And according to BizBuySell, transactions are expected to strengthen in 2022 as more sellers return to the market.

2021 BizBuySell Insight Report

For the year, the report reveals ongoing COVID-19 outages, rental challenges and supply chain disruptions. However, US business-for-sale transactions jumped by 14% in 2021. This comes after moderate gains at the beginning of 2021. Transactions then increased by 28% in the fourth quarter, surpassing the pre-pandemic 2019 numbers. This has brought optimism for the rest of 2022.

In terms of sales, a total of 8,647 closed transactions were reported in 2021, compared to 7,612 in 2020. Of these, 2,364 occurred in the fourth quarter. The growth also includes the selling prices of these businesses with a 16% year-on-year jump. It accounted for an annual record high selling price of $ 325,500. BizBuySell attributed the highlight to buyers competing for a limited supply of high-performing businesses.

In terms of sales, businesses with strong finances continued to dominate. This was responsible for the growth of the median cash flow from sold businesses to $ 149,099, a growth of 10%. If there was poor performance, buyers were looking for businesses with discounts as well as excellent property and other valuable assets

More business sales data for 2021

For the year, the median selling price ended at $ 324,500 and the median revenue increased by 2% to $ 625,943. And more than half or 53% of brokers attribute the growth to the demand for businesses that flourished during the pandemic. Overall sales prices are rising with the demand for profitable businesses remaining strong.

Additional data in the report reveals 62% of brokers said they saw higher transactions than in 2020. The transactions were divided into equal percentages at 46%. For those selling it, it was due to the lack of stock which, according to the report, was an obstacle to market recovery. And for those who were buying, the increase was due to demand caused by the Big Resignation, SBA utilities and low interest rates.

Limited stock

Even with the record selling prices, small business owners said the pandemic had an impact. More than half or 52% said they were negatively affected. And for most of these owners, that meant they had to wait to recover before their exit. In the report, brokers said pandemic-related issues keep businesses off the market coupled with low performance (38%), sellers have unrealistic expectations 46% and financing challenges 15%.

Optimism for 2022

The report says more owners are expected to sell in 2022, even with operational challenges and pandemic burnout. As a result, 43% of homeowners say they are extremely motivated to sell their business.

Another driving force in 2022, according to the report, is the pent-up supply of businesses for sale fueled by Baby Boomer retirees. Conversely, brokers also expect an increasing number of Baby Boomers to enter the market.

Demand will also be driven due to the large resignation. Brokers reported 21% of business buyers said they were part of the big resignation. While another 23% of their inquiries came from new unemployed seeking ownership or corporate refugees.

BizBuySell’s Insight Report follows and analyzes business-for-sale transactions and the sentiment of business owners, buyers and brokers.

Image: BizBuySell

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