- Total transacted value was down 4% to $1.9Billion in Q2
- Manufacturing transactions plummeted but retail and service was up
- Outlook is still optimistic for full year 2025
- Buyers and Sellers need to prepare themselves for a transaction
BizBuySell the largest small business marketplace recently released their Q2 Insight report. The report highlighted that business sales slowed down during Q2 as the market adjusted for potential tariffs and stubborn inflation.
Total transactions in Q2 totaled 2,342 this was down 4% from last year’s total of 2,448. Although transactions slowed overall two sectors saw increased deal flow 1) Retail and 2) Service.
Retail sector deal volume rose 2% year over year, and the median sale price increased 13% as buyers targeted high-performing businesses. Median cash flow for retail companies jumped 14% year over year. The service sector showed resilience too as deal volume increased.
The sector responsible for a majority of the decrease in deal volume was manufacturing. This should come as no surprise as manufacturers tend to have exposure to potential tariffs. Manufacturing transactions dropped 28% year-over year, while the median sale price fell 7%. Financials also weakened with median cash flow down 19% and median revenue down 26%. Business broker Larry Sheaffer, reported, “buyer interest was up but focused on manufacturers who source their raw materials in the US.”
Market Outlook: Moderate Growth Fueled by Motivated Buyers
Overall demand is expected to remain steady for businesses that have strong financial performance and growth opportunities. Most buyers indicated the current economics are not causing them to delay their purchase timeline. However, recent changes to SBA lending requirements are creating a headwind.
How Buyers and Sellers Can Prepare for a Successful Sale
In this competitive market buyers need to plan ahead and position themselves as strong candidates and have a clear understanding of the competition for quality businesses. With sellers increasingly cautious due to changes in SBA lending requirements and tariff talk, buyers who come prepared and communicate clearly are more likely to earn seller confidence and close the deal.
For those looking to sell in a market marked by cautious optimism, preparation is the key. Sellers must have a realistic understanding of what their business is worth, and if need be, make the necessary improvements to attract buyers.
Broker Pat Adams, urges owners to manage expectations: “Understand that the market value of your business is almost never going to feel equal to all the blood, sweat, and tears you’ve poured into it.”
Buyers Compete for Recession Resistant Businesses
Even as consumers cut back on spending, business buyers are actively seeking opportunities in industries that offer stability during economic downturns. Recession resistant businesses with consistent cash flow have become prime acquisition targets, often commanding multiple offers and strong sales prices.
BizBuySell survey data reflects this trend with 73% of business buyers prioritizing steady consistent businesses. The survey also indicated that 64% of buyers are focused on service-based companies. The buyer pool is evolving as more “corporate refugees” enter the market. These employees or former employees are seeking alternatives to corporate America where job security is weakening. Nearly 45% of buyers now identify as corporate refugees, up from 36% a year ago. Click here to read the full article.
