Small business acquisitions are on the rise in 2024, marking a significant rebound after a relatively stagnant 2023. Despite challenges such as inflation and rising interest rates, the small business market is showing resilience and promise. Here are the top three trends shaping small business acquisitions this year:
1. Small Business Acquisitions on the Rise
According to BizBuySell's Insight Report, small business acquisitions grew by 10% over the previous year and 3% over the previous quarter. In the first quarter of 2024, 2,384 businesses changed hands, representing an enterprise value of $1.8 billion. This marks a 24% increase compared to the same period last year. Most notably, buyers are willing to pay a premium for profitable restaurants while other sectors are seeing more pressure on pricing. Small business owners also note that they are still feeling the effects of inflation and higher employment costs.
2. Leveraging AI for Business Growth
The adoption of artificial intelligence (AI) is becoming increasingly common among small businesses. Thirty-five percent (35%) of small business owners now use AI in their businesses, with marketing being the most common application. According to recent data, 71% of small business owners who use AI report that it has improved their business's performance. For many small business owners, AI can help streamline processes, improve decision-making and even improve the customer experience—all of which lead to a more valuable business.
3. Market Outlook and Deal Structure
Despite challenges posed by inflation and rising interest rates, the small business market remains strong. Transaction activity is expected to pick up pace throughout 2024, with economic output forecasted to expand. In response to continued high interest rates, and the Fed indicating that they won’t lower rates anytime soon, more sellers are offering some level of seller financing to secure deals. A savvy seller will provide creative deal structure to entice more buyers for their business. As always, clean financials and good infrastructure will continue to allow for premium pricing.
In 2024, small business acquisitions are on the rise, driven by increased demand and a favorable market outlook. By leveraging AI and adapting deal structures, both buyers and sellers can navigate the current economic landscape with confidence. As the year progresses, small businesses will have the opportunity to thrive and grow, despite ongoing challenges. Having an experienced business broker, like our team at Transworld. to help you navigate the process is key to your success as either a seller or buyer. To learn more and schedule a no-obligation meeting with us, click HERE or call us at 385-342-4200.
