This is the first update of 2024. I hope this year is starting off well for you.
I thought I’d take a minute and give you a quick synopsis of data from the website BizBuySell.com – one of the more popular “Businesses for Sale” websites for smaller businesses.
Small Business M&A continues to recover from 2020/2021, but is seeing the impact of higher interest rates
According to BizBuySell.com, a total of 9,093 businesses were sold in in the United States in 2023.
After a low of 1,481 sales in the 2nd Quarter of 2021, transactions have continued to recover through the 4th Quarter of 2022 and the 1st and 2nd Quarters of 2023, but still have not reached the high of Q2 2018 (2,705 sales). Reflecting increases in interest rates by the Federal Reserve, 3rd Quarter 2023 sales dipped slightly. However, in the 4th Quarter of 2023, sales increased with the news of reduced inflation and the promise of potential interest rate cuts.
The outlook seems to be strong for the M&A market in 2024.
Specifically, for my Colorado readers
According to BizBuySell.com, In the Denver/ Aurora area there were 190 reported small business sales with the median sale price being $425,000 compared to a median asking price of $450,000. This represents a sales to asking price of 91%. The median revenue for those companies was $817,000. This resulted in a sales price to revenue percentage of 65%. The median “days on market” for these companies was 163.
Manufacturing Sector Shows Strong Growth
According to BizBuySell.com, the manufacturing sector, while still smaller than others, showed the strongest percentage growth in 2023, with the number of closed deals up over 20% and, reportedly, sale prices up 15%. The median sale price rose from $700,000 to $797,000. Demand for manufacturing businesses has increased for several reasons. As a result of of the pandemic and other political pressures, offshore supply chain disruptions and a growing demand for advanced automation technologies has made manufacturing here in the US more practical.
As always, if you would like to discuss the future possibility of exiting your business and the proper planning for doing so, I would love to talk with you. Just click on the link below to set a time on my calendar and I would look forward to our conversation.
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