July 2022 – BizBuySell’s Insight Report, a nationally-recognized economic indicator that tracks the health of the U.S. small business economy, was just published detailing the latest market activity. Each quarter, BizBuySell analyzes sales and listing prices of small businesses across the United States based on approximately 50,000 businesses for sale and those recently sold, reporting changes in closed transaction rates, valuation multiples and other economic indicators for the small business transaction market.
The broader report showed small business acquisitions slipped 3% in Q2 of 2022, but still gained 14% year-over-year, suggesting a strong market navigating economic headwinds. More pronounced, the median sale price dropped 9% below the previous quarter from $345,000 to $315,000, but which is still just 2% below last year’s $320,000. The drop in sale price appears linked to more realistic prices, perhaps pricing in inflation and recession concerns, as indicated by a 3% quarter over quarter drop in average cash flow multiple of sold businesses. Horizon Business Brokers Founder and Principal Broker, Dustin Zeher was quoted in the latest release saying, “I have not yet noticed any dips in sale prices. However, I am expecting them to start,” said Zeher. “Not only due to potentially falling cash flow, but due to the higher cost of the acquisition. With interest rates increasing the overall cost of the transaction, buyers will offer less to try and maintain a good ROI for the risk of their capital and time.”