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BizBuySell Q3 2023 Insight Report

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Jeff Snell | 10/19/2023

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Welcome to the BizBuySell third quarter 2023 Insight Report Highlights, presented by ENLIGN Advisors. With experienced professionals serving your lower middle market to Mainstreet business transaction requirements nationwide.

Referencing the most recent BizBuySell Insight Report, we will focus on three key market factors.

Starting with the number of closed small business transactions since 2017 by quarter, then the increased use of seller financing due to increased interest rates and debt service coverage ratios. And finally, the median business sale prices versus asking prices over the period.

Here, we can see that the second quarter of 2020 experienced significantly fewer small business transactions compared to those going back to 2017.

Q3, 2023 business sales did see a slight decline over Q2, but remained above the previous two quarters. Some feel the decrease is due to rising interest rates and debt service coverage ratios required by banks. BizBuySell is reporting that business buyers and sellers are increasingly utilizing a component of seller financing to bridge the price gap in part caused by higher interest rates and debt service coverage ratio requirements.

Business sellers are increasingly leveraging more seller financing at lower interest rates to help offset these pressures to achieve the highest market value. Seller financing is one of the few options sellers can utilize to bridge the gap when it comes to asking prices versus actual selling prices.

This chart shows that compared to Q2 of this year, asking prices are slightly higher with the actual reported sales price gap narrowing.

From everyone here at ENLIGN Advisors, we'd like to thank you for watching our analysis of selected topics from the BizBySell 3rd Quarter 2023 Insight Report. For the full report and other useful business transaction information, visit our blog at www.enlign.com.

If you're seeking expert guidance in purchasing or selling a business, contact us today for a free consultation. Until next time, we wish you the best in your business sale or acquisition project.