Business Sales Report Winter 2022

The number of businesses being bought and sold continued to rebound, with closed transactions in the fourth quarter up 28% over pre-pandemic levels of Q4 according to a recent report by bizbuysell. Sellers are returning to the market although supply is still limited in most sectors. Corporate refugees who have either lost their jobs or were forced into retirement continue to be a large part of the buyer segment.

As we enter 2022, the Omicron variant has created downward pressure on valuations in the first quarter of the year. Looking ahead to the rest of 2022, inventory should continue to increase with burned out sellers coming to the market. Between labor market shortages, supply chain disruption and pandemic fatigue many sellers are ready to move on or retire.

If you are thinking of selling, now is a good time to sell before the market becomes saturated with more inventory especially as seasonality should return to the business sales market with the expected post new years increase in demand from buyers.

Labor shortages, rising wages and supply chain issues continue to impact the bottom line in most businesses. Service businesses continue to be in demand from buyers as they are not as affected by import logistics related problems. With cost of goods continuing to increase and businesses getting squeezed, the year ahead will bring more businesses to the market.

The NYC region continues to lead the nation with the amount of listings on the market. Sellers need to make sure to price accurately with more competition than other regions.

For sellers, having accurate records is the most important item an owner can do in preparation for sale. It is imperative for sellers to provide month-to-month and/or quarterly financials to show signs of business returning to normal quicker than waiting on yearly numbers. Buyers want to see evidence that sales numbers are returning to normal. According to a survey by BizBuySell, 60% of buyers indicated profitability and strong financials as a purchase requirement.

Two other factors that can make a business a tough sell include a lack of a financing option, either SBA or seller financing and a bad lease or one that is month to month.