Transactions listed as closed on the BizBuySell website. 2022 was still a good year, however not as high as 2019. There are still a lot of boomers hanging on trying to get maximum dollar for their business.
The business for sale market grew modestly in 2022, with closed transactions up 4.7% over the previous year, representing a 19% gain since 2020, when many small businesses faced COVID lockdowns, yet still 7% below 2019’s pre-pandemic levels. The first half of the year experienced strong year-over-year gains, but as inflation surged and interest rate hikes took effect, momentum slowed in the second half.
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 Source: BizBuySell.com
A total of 9,054 transactions were reported in 2022, compared to 8,647 in 2021. The year began with a YOY boom in transactions, up 27% in Q1 and 14% in Q2. Transactions then lagged in the second half of 2022, dropping 2% in Q3 and 12.7% in Q4. This according to BizBuySell’s Insight Report, which tracks and analyzes U.S. business-for-sale transactions and sentiment from business owners, buyers, and brokers.
Financial performance was rocky over the course of 2022. Median revenue dropped 11% in Q3 from Q2 and rose 3% in Q4, finishing 2022 down 2% year-over-year. Median cash flow dropped 3% in Q3 from Q2 and remained flat in Q4, finishing 2022 down 1% year-over-year. Similarly, the average revenue multiple dropped from .67 to .65 and average cash flow multiple dropped from 2.55 to 2.53.
According to business brokers surveyed, the 2022 market showed increased activity compared to 2021. About a third (33%) closed slightly more deals, while 22% closed significantly more deals. Most brokers (47%) attribute the increase to higher buyer demand for thriving businesses, while 41% believed it was due to an increased number of buyers entering the market.
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