27 Jan BizBuySell Insight Report for 2022
BizBuySell has issued their latest insight report, which summarizes market growth and trends from last year. In this report, they have several interesting areas to report including a summary of how lower sales prices and rate hikes impacted the value of businesses in recent months. The report can be found at https://www.bizbuysell.com/insight-report/#reportArchive.
Overall Trends in 2022
Buyers currently appear to have some leverage when it comes to the prices of businesses on the market. When comparing 2022 with 2021, we see a 4.7% increase in closed transactions. Comparing it to the year prior, there is a 19% gain. Obviously, 2020 sales were negatively impacted by COVID.
While sales grew substantially in the first half of 2022, there was a decrease in momentum in the second half of the year due to inflation and interest rate increases.
The number of transactions recorded by BizBuySell.com in 2022 are actually fairly comparable to 2021, with numbers of 9054 and 8647, respectively. While the transactions raised 27% and then 14% in the first and second quarters, transactions then lagged in the second half, dropping by 2% and then 12.7%.
Business Broker Activities
When looking at financial performance, we also see ups and downs. When BizBuySell surveyed business brokers, they saw that 2022 had more activity than 2021. 33% of brokers reported closing a few more deals, but 22% reported closing many more deals. Some brokers believed this increase was due to more buyer demand, while others believed more buyers are simply entering the market.
While more deals closed, it is important to note that the average sales price dropped 3% last year. The consensus for this change is that inflation and rising interest rates are taking their toll. The median revenue of businesses also declined 3% in 2022, from 665,107 to 650.
The business brokers surveyed seemed to feel that sellers were more likely to be willing to negotiate lower prices due to the fact that Covid is still a factor. Simultaneously, interest rates weeded out buyers and put pressure on valuations to decrease.
Trends Among Business Owners
BizBuySell’s surveys showed that some business owners are currently worried about lost sales and customers. The majority of owners are concerned about rate hikes and inflation. In fact, 53% say that the rate hikes are having a negative impact on them. They also reported concerns about rising SBA loan rates, as many business owners utilize their lines of credit. In addition to that aspect, there are still supply chain issues that are negatively impacting businesses.
Business owners also reported having issues paying back economic injury disaster loans that they took out due to Covid. This issue was reported by 26% of business owners.
The main takeaways from 2022 seem to be a steady but slow progression in growth. Moving into 2023, interest rate hikes and inflation seem to be on everyone’s mind as a prevailing factor that will have an impact on sales and growth.
