- Total transacted value was up 3% to $7.95 billion in 2025
- Service sector transaction volume was up 4%
- Outlook is Optimistic for 2026
- But Buyers and Sellers need to be prepared
BizBuySell the largest small business marketplace recently released their full year 2025 Insight report. The report highlighted that transactions declined in Q1 and Q4 but activity accelerated during Q3 as sellers lowered their expectations and buyers remained ready. The government shutdown hampered deals so transaction volume slipped 2% in Q4. Overall transaction volume in 2025 totaled 9,586 deals worth $7.95B this was up .46% and 3% respectively from last year’s totals of 9,546 transactions worth $7.71B.
Despite the quarterly swings, overall financials of sold businesses remained stable. The median sales price rose 2% year-over-year while median cash flow and median revenue increased 3% to $158,950 and $703,000, respectively.
The Service Sector Led the Way
Buyer interest in essential industries surged with the service sector leading the way. Transaction volume for service businesses rose 4%. There was an increase of 38% in transaction volume for financial services. Similarly, technology services saw a 12% gain in transaction volume while architectural and engineering firms saw a 17% gain in transaction volume. Pricing power and financials remained strong for service businesses as the median sale price ($340,000) was up and median cash flow was unchanged ($154,000). Moreover, the average cash flow multiple for service businesses increased by 2% to 2.52.
A broker in Utah reported, “Businesses that can pass along costs to customers to maintain reasonable margins are still seeing strong valuations. As a result, companies with unique products or services are often less impacted by price increases and, therefore, by inflation and can still command premium pricing.” Said Dave McGill of Murphy Business Sales.
Manufacturing Lagged the Market
Meanwhile acquisitions within the manufacturing sector experienced significant headwinds. Transactions fell 11% year over year, and the median sales price dropped 7% to $650,000. This should come as no surprise as manufacturers tend to have exposure to potential tariffs. Financials also weakened with median cash flow down 2% to $254,489 and median revenue down 8% to $1,100,000. Business broker Max Friar of Calder Capital shares his experience over the past year, “It’s a mixed bag. We’ve seen a lot of manufacturing distress in the Midwest. Tariffs, the EV market, etc. have caused some chaos. However, there are many very strong companies.”
Market Outlook: Growth Fueled by Motivated Buyers and Moderating Seller Expectations
The Buyer-Seller Confidence index remains strong at 61, largely reflecting expectations of improved opportunities in 2026. Overall demand is expected to grow as 80% of business brokers forecast higher deal volume over the next six months compared to the same period last year.
Whose Buying
A growing wave of buyers who identify as “corporate refugees,” make up 44% of the buyer pool and another 15% identify as unemployed. Private Equity (PE) firms and search funds continued to expand their footprint in the small business market in 2025. Nearly half of brokers (44%) report an increase in PE activity. The demand is driven by roll up strategies and direct acquisition but 49% say PE buyers introduce a more complicated transaction process, and only 12% say PE moves faster than individual buyers. Search funds especially those led by MBA graduates pursuing Entrepreneurship Through Acquisition (ETA), are becoming a major force. A significant number of brokers (43%) report increased activity from business-school-trained buyers, whom some brokers describe as analytical and well capitalized but, in certain cases, lack real-world operating experience.
Why Owners are Selling
As buyer demand is increasing motivation for selling is robust too. Many owners cite burnout, retirement planning, and economic uncertainty as reasons they are motivated to sale. Additional factors, such as health, litigation, and disputes underscore how quickly the decision to sell can shift.
“The best time to sell your business is when you don’t have to. Don’t wait too long,” said Charles McPherson of Inbar Group, Inc. in Maine.
These motivations shape the priorities owners bring into the sale process. Of the sellers surveyed, 44% want a fast, low-stress sale, 28% are seeking top dollar, and 25% emphasize continuity and employee well-being.
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. Be realistic. If you find a very attractive business, get ready to compete with other buyers for it. Show sellers you are a bona fide buyer by getting prequalified with an SBA lender. Above all, speed and credibility consistently separate serious buyers from those stuck in the paralysis of analysis.
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. The first step should be ensuring accounting records and tax returns support their desired price. Ultimately, sellers who treat their exit like a strategic project, not a last minute decision-tend to attract more qualified buyers, command better prices, and navigate smoother transitions.
