Is it a good time to sell your small business — or maybe buy one? Small business acquisitions were up and down in 2023, reflecting the increase in interest rates that threw a chill into the market. But a strong fourth quarter, helped by a signal from the Federal Reserve that it was done raising interest rates, could bode well for 2024.
Quick Read
- Small business acquisitions in 2023 experienced fluctuations, reflecting the impact of rising interest rates on the market.
- Despite the market’s ups and downs, the total number of small businesses sold in 2023 remained relatively stable, with a slight increase to 9,093 from 9,054 in 2022, according to BizBuySell’s Insight Data.
- The total value of these transactions increased from $6.3 billion in 2022 to $6.5 billion in 2023.
- The market saw a 10% decline in transactions during the first quarter, stability in the second and third quarters, and a 12% increase in the fourth quarter, influenced by signs of easing inflation and the Federal Reserve’s indication of halting interest rate hikes.
- The positive trend in the fourth quarter suggests a potentially favorable outlook for small business acquisitions in 2024.
- Experts like Ken Bohenek from Murphy Business Sales in Northern Idaho suggest that it could be a good time to buy a business if it offers a solid return on investment and the ability to service debt, regardless of current interest rates.
The Associated Press has the story:
Small business acquisitions leveled off in 2023 as interest rates climbed
Newslooks- NEW YORK (AP) —
Is it a good time to sell your small business — or maybe buy one? Small business acquisitions were up and down in 2023, reflecting the increase in interest rates that threw a chill into the market. But a strong fourth quarter, helped by a signal from the Federal Reserve that it was done raising interest rates, could bode well for 2024.
Overall, the number of small business acquisitions was largely unchanged in 2023, according to business marketplace BizBuySell’s Insight Data, which tracks and analyzes U.S. business-for-sale transactions.
A total of 9,093 businesses were reported sold on BizBuySell in 2023, up less than 1% from the 9,054 businesses sold in 2022. The value of the deals rose to $6.5 billion from $6.3 billion. Quarterly results show stark changes in the market: Transactions fell 10% in the first quarter, remained flat in the second and third quarters as interest rate hikes slowed, and rose 12% in the fourth quarter, amid news of cooling inflation and potential rate cuts.
So it might be a good time to buy — as long as the business seems solid.
“If the business has a good return on the investment and ability to service debt, it’s likely a good time to buy, regardless of rates,” said Ken Bohenek, business intermediary at Murphy Business Sales in Northern Idaho. “Then, as rates soften, you’ll likely be in a much better cash flow position than those who bought when money was cheap, and rates quickly escalated.”
