For the many older entrepreneurs ready to retire in the US, the window is closing for outsize payouts.
Prices for US small businesses that surged during the pandemic fell back down in the second half of last year, according to online business marketplace BizBuySell.com. The rapid increase in interest rates is deterring would-be buyers and inflation is eating into sellers’ profits — lowering valuations.
At $315,000, the median sale price is down 10% from its peak in the fall of 2021, according to BizBuySell.com. The number of transactions also dropped in the second half of 2022 amid increasing uncertainty about the economic outlook.
The recent slowdown is a return to “more normal times,” not a major downturn, said Bob House, president at BizBuySell, a unit of real estate services firm CoStar Group Inc.
There’s still a lot of appetite for small manufacturers, according to broker Sheila Spangler, of Murphy Business & Financial in Boise, Idaho. “Any company that makes something, we get 40, 50, 60 inquiries,” she said.
And there are plenty of sellers as well, including a large cohort of aging baby boomers who are seeking to retire.
“Sellers are thinking more about selling now after having gone through the last three years,” Spangler said.
Joe LaCugna, 62, is one of them, looking to slow down once he sells his baseball and softball instruction business, the Hot Corner, in Englishtown, New Jersey. Right now no one seems to want to take a risk, he said. LaCugna recently lowered his asking price to just under $300,000.
