BizBuySell Insight Report- Acquisitions Drop 22% in 2020, Thriving Businesses Sell at Record Prices
As we move away from 2020 and into 2021 it’s interesting to see the impact of the Pandemic on business sales last year. BizBuysSell’s recent Insight Report recaps a number of data points from 2020.
The number of small businesses reported sold in 2020 dropped 22% compared to 2019. This was the largest year-over-year drop since 2009 at the start of the Great Recession when transactions dropped 28%.
A total of 7,612 businesses were reported as acquired in 2020, compared to 9,746 in 2019. Conversely, the median sale price rose 12% to $279,950, with revenue and cash flow reaching record highs, according to BizBuySell’s Insight Report, which tracks and analyzes U.S. business-for-sale transactions and sentiment of business owners, buyers, and brokers.
While transactions slowed, the median cash flow of sold businesses grew 10.7% over 2019 to $135,567, while revenue increased 8.2% to $613,341. The impressive financials speak to the quality of businesses changing hands – specifically, the spiking demand for pandemic resistant businesses, while weaker deals remained sidelined.
Heading into 2020, the business-for-sale market was strong, with a steady supply of profitable businesses from retiring Baby Boomers being scooped up by a new generation of buyers. Then in March, as much of the U.S. went into lockdown, owners postponed transitions and buyers paused their search, while banks froze lending. By the end of the month, March transactions had dropped 43%, swinging first quarter sales down 11% year-over-year.