The small business acquisition market saw strong growth in 2024, with transactions rising 5% and a total of 9,546 businesses changing hands, according to BizBuySell’s latest Insight Report. The total enterprise value of these sales climbed to $7.59 billion, a 15% jump from the previous year. While the Federal Reserve cut interest rates multiple times, 60% of surveyed buyers said these changes had no effect on their purchasing timelines, suggesting that financing conditions remain a challenge for many buyers.
Sales activity gained momentum throughout the year, with the strongest increase of 10% occurring in the first quarter before stabilizing in later months. The median sale price climbed 3% year-over-year to $345,000, and the average cash flow multiple rose from 2.49 to 2.57. Transactions also moved at a faster pace, with the median time on the market decreasing to 168 days.
“Despite the Federal Reserve’s rate cuts, many commercial lenders have kept underwriting criteria tight, resulting in minimal pass-through savings for acquisition financing,” said BJ Delhamer, vice president at Insite Commercial Real Estate Advisors.
Several industries drove the increase in transactions, with manufacturing, technology, and construction businesses seeing a combined 32% rise in sales. Manufacturing deals increased by 15%, reaching a median sale price of $700,000. Online and technology businesses saw the largest growth, with a 74% spike in acquisitions. The construction sector also remained active, with a 10% increase in sales.
While demand for small businesses remains high, rising costs continue to put pressure on business owners. Nearly half of those surveyed expressed concerns about increasing expenses due to tariffs, with some shifting to domestic suppliers in response. More than 50% cited higher costs of goods, insurance, and payroll as key financial challenges.
Despite these obstacles, more owners chose to sell in 2024, with 38% of brokers reporting that the market now favors buyers. Retirement remains the most common reason for selling, followed by owners looking to pursue new opportunities or take advantage of high business valuations.
With shifting economic conditions, buyers and sellers alike will need to remain flexible as the small business acquisition landscape continues to evolve.