Small Business Acquisitions on the Rise: Key Trends and Insights for 2025

As we step into 2025, the small business acquisition landscape is buzzing with activity, driven by several compelling trends and factors. Here’s a breakdown of the essential details and what they mean for buyers, sellers, and the broader business community.

Small Business Acquisitions Increase In 2024, small business acquisitions in the U.S. saw a significant 5% increase, with 9,546 closed deals valued at $7.59 billion, a 15% jump from 2023. This growth is a testament to the resilience and attractiveness of the small business market[1].

Higher-Priced Deals and Market Growth The market growth was fueled by higher-priced deals, with a notable 10% increase in Q1, followed by 5% in Q2 and Q3, before stabilizing in Q4. The median sale price rose by 3% to $345,000, and the average cash flow multiple increased from 2.49 to 2.57. Transactions also moved faster, with the median days on the market dropping to 168 days[1].

Industry Sector Performance Several key industries stood out in 2024:

– Manufacturing: A 15% increase in acquisitions, with a median sale price of $700,000 and a 9.5% rise in cash flow multiples despite weaker margins.

– Online and Technology: A staggering 74% surge in transactions, though with a median sale price of $650,000, which is 24% lower than in 2023, indicating more lower-priced deals.

– Building and Construction: A 10% growth in acquisitions, with a median sale price of $760,000 and stable valuations along with small gains in cash flow[1].

Tariff Concerns and Inflation The return of Trump administration tariffs has raised concerns about rising costs, with 48% of business owners preparing for increased expenses and 15% seeking domestic suppliers to mitigate risks. Additionally, one in five business owners plan to pass these costs onto consumers, potentially fueling inflationary pressures. Despite easing inflation, high costs remain a challenge, with 78% of business owners experiencing increased expenses in 2024[1].

Financial Performance and Seller Activity Financial performance remained relatively flat, but sellers continued to offload businesses, driven by reasons such as retirement (38%), pursuing other opportunities (35%), and cashing in on high business values (21%)[1].

Buyer Trends The market saw an influx of corporate refugees and young entrepreneurs, particularly those driven by Entrepreneurship Through Acquisition (ETA) programs. Buyers are focusing on stable, recession-resistant businesses (76%), with 42% prioritizing financial performance[1].

Market Outlook for 2025 With financing constraints expected to persist, seller financing is anticipated to play a larger role, cited as critical by 91% of brokers. Interest rates remain a top concern, and buyers and sellers are advised to explore creative financing options such as seller notes, earn-outs, or partial equity retainment[1].

Sector-Specific Trends Other sectors also showed notable trends:

– Service Businesses: 40% of transactions, with a median sale price of $325,000 and slight growth.

– Retail: Flat transaction volume, with a median sale price of $255,000 and steady demand for specialty businesses.

– Restaurants: Flat sales volume, with a median sale price of $225,000, a 4% drop in revenue offset by higher profit margins.

– Private Equity Firms: Increasing interest, particularly in niche industries with strong cash flow[1].

Post-Election Activity With post-election uncertainty fading, buyers are expected to accelerate purchases. Carrie Duvall, CEO at 1st & Main Partners, reported a strong start to 2025, closing multiple deals that exceeded her best annual earnings[1].

What This Means for You Whether you are a buyer, seller, or simply an enthusiast of the small business world, these trends offer valuable insights:

– Buyers: Look for stable, recession-resistant businesses and be prepared to negotiate creative financing options.

– Sellers: Consider the current market conditions and the potential for higher sale prices, especially in growing sectors like manufacturing and technology.

– Entrepreneurs: The rise of ETA programs and the influx of corporate refugees into entrepreneurship highlight the attractiveness of acquiring and running a small business.

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