Small Business Acquisition Trends: Stability in 2023 and a Promising Outlook for 2024

Considering the current economic climate, deciding whether to sell or purchase a small business can be challenging. Small business transactions experienced fluctuations in 2023, significantly influenced by the climbing interest rates which cooled down the marketplace.

2023 at a Glance: A Steady Pace in Small Business Sales

Despite the seesawing market conditions, the acquisition landscape for small businesses remained relatively constant over the past year. BizBuySell's Insight Data, which evaluates business-for-sale transactions across the United States, revealed that 2023 saw a marginal increase in business sales. Approximately 9,093 companies changed hands, a slight uptick from the 9,054 transactions registered in 2022. The total value of these deals experienced a rise from $6.3 billion to $6.5 billion.

The year unfolded with notable variance in quarterly results. The first quarter experienced a 10% decline in sales. However, the second and third quarters maintained a level playing field as the pace of rate hikes by the Federal Reserve slowed down. The year closed with a promising 12% increase in the fourth quarter, following indications of subdued inflation and potential rate cuts.

An Optimistic Outlook for Buyers in 2024

Entering 2024, the market could present favorable conditions for buying into a small business, particularly if you're considering a financially resilient enterprise. Experts suggest that the timing could be advantageous.

"If the business has a good return on the investment and the capacity to manage debt effectively, it's potentially a wise time to invest," shared Ken Bohenek, a business intermediary. He added, "Those who make a move now could find themselves in a stronger cash position as interest rates potentially ease up, compared to those who bought when financing was more accessible, but faced rapid rate hikes shortly after."

The signals from the Federal Reserve indicating a halt in interest rate increases and a solid last quarter for small business sales, might signal a more robust year for acquisitions in 2024.

Acquisitions, InterestRates, Forecast