In the small business acquisitions sector, 2024 has brought interesting trends defined by dynamic market forces, technological advancements, and evolving investor preferences. As the global economy continues its recovery from recent disruptions, buyers are strategically adjusting their approaches to seize opportunities with a growing seller supply. These trends are reshaping deal structures, investment strategies, and operational models, requiring small business owners to adapt and innovate to remain competitive in the evolving market environment. In this article we analyze the new trends influencing the acquisitions market in 2024, offering insights into their implications for investors, dealmakers, small business owners, and the broader business community.
While technology has seen incredible leaps in the last year due to artificial intelligence, many small businesses have seen a greater impact from infrastructure legislation. Construction companies like concrete and flatwork services, excavation, pipework, maintenance and repair and many others have been able to secure more contracts from local governments. Increased revenue and long-term government contracts can be beneficial to sellers, as long as the growth is well-documented in their financial due diligence documents. A business broker can help position the business and find buyers who are looking to invest in the construction and infrastructure industries.
The food industry has been rebounding since its decline during the COVID-19 pandemic. Both the number of deals and the average sale price have increased, as revenues have grown since customers return to dining out. Although the food industry and construction industry have seen acquisition growth, strong employment levels and rising wages are helping the retail and services industries which face headwinds due to inflation driven pricing pressures. Consumer buying trends are shifting to more value-conscious purchase decisions. Potential purchasers of retail businesses quiz sellers about such trends and adjust their purchase offers accordingly when necessary. While the volume of services deals decreased in the last 12 months, the average sale price has increased. BizBuySell’s Insights Report indicates that services businesses have an easier time passing inflation costs to its consumers.
In 2023, M&A activity initially slowed but saw a notable uptick in the fourth quarter, according to a McKinsey & Company article on Top M&A Trends in 2024. This acceleration can be attributed to a growing optimism about the economic outlook, prompting businesses to pursue strategic acquisitions to capitalize on emerging opportunities and position for growth. Another growing buyer group are workers who are looking to leave their salaried jobs for an entrepreneurial career. Many seasoned office workers are tired of being tied to a set schedule and corporate rules; they are actively looking for established businesses to acquire and operate.
These prospective buyers may have deep industry experience, but struggle to meet the tighter loan underwriting standards for conventional bank loans or SBA loans in today’s environment. Or they may prefer to avoid the risks associated with SBA loans. Seller financing has grown in popularity in the last few years as interest rates have increased. This option enables buyers to negotiate terms directly with the seller, typically involving a down payment and structured repayment plan. Business brokers can help buyers and sellers reach win-win terms. Seller financing provides flexibility for both parties, allowing buyers to secure funding without meeting strict bank requirements and enabling sellers to generate income from the sale over time. Seller financing offers a viable solution for buyers facing obstacles in securing traditional financing, facilitating smoother transactions in the acquisition process.
If you’re planning on retirement any time soon, recognizing trends in the acquisitions market is important for when you’re ready to sell. Preparing a business for sale includes long-term strategies and financial planning, which can take years to implement. Arthur Berry & Company has the capabilities to sell any type of business, and can help any business owner prepare their business for a successful transition.
