The BizBuySell Insight report for 2021 reveals that small business acquisitions picked up in 2021. So much so that sales surpassed pre-pandemic levels in Q4. This bodes well for the coming year. And according to BizBuySell, transactions are expected to strengthen in 2022 as more sellers return to the market.
BizBuySell Analysis Report 2021
For the year, the report reveals the ongoing fallout from COVID-19, hiring challenges and supply chain disruptions. However, business for sale transactions in the United States rebounded 14% in 2021. This comes after moderate gains at the start of 2021. Transactions then increased by 28% in the fourth quarter, which exceeded the figures from before the pandemic in 2019. This brought optimism for the rest of 2022.
In terms of sales, a total of 8,647 closed deals were reported in 2021, compared to 7,612 in 2020. Of these, 2,364 were in the fourth quarter. The growth also includes the selling prices of these companies with a jump of 16% year-over-year. This was responsible for a record annual sale price of $325,500. BizBuySell awards the top spot to buyers competing for a limited number of successful businesses.
In terms of sales, companies with strong financials continued to dominate. This was responsible for the median cash flow growth of businesses sold to $149,099, a 10% growth. When performing poorly, buyers were looking for discounted businesses as well as prime real estate and other valuable assets
More company sales data for 2021
For the year, the median sale price ended at $324,500 and the median revenue increased 2% to $625,943. And more than half or 53% of brokers attributed the growth to demand from businesses thriving during the pandemic. Overall selling prices are rising as demand for profitable businesses remains strong.
Additional data in the report reveals that 62% of brokers said they saw higher trades than in 2020. Trades were split into percentages equal to 46%. For those who were selling, it was due to the lack of inventory which was an obstacle to the market recovery according to the report. And for those buying, the increase was due to demand caused by the Great Resignation, SBA relief programs and low interest rates.
Even with record selling prices, small business owners said the pandemic had had an impact. More than half or 52% said they were negatively impacted. And for most of those owners, that meant having to wait to recover before they got out. In the report, brokers said pandemic-related issues are driving companies out of the market along with poor performance (38%), sellers with unrealistic expectations 46% and funding issues 15%.
Optimism for 2022
The report says more owners are expected to sell in 2022, even with operational challenges and pandemic burnout. Thus, 43% of owners say they are extremely motivated to sell their business.
According to the report, another driving factor in 2022 is the pent-up supply of businesses for sale fueled by baby boomer retirees. Conversely, brokers also expect an increasing number of baby boomers to enter the market.
The request is also going to be pulled due to the big resignation. Brokers reported that 21% of business buyers said they were part of the big quit. While 23% of their claims came from newly unemployed property seekers or corporate refugees.
BizBuySell’s Insight Report tracks and analyzes business for sale transactions and the sentiment of business owners, buyers and brokers.