“Buyers are gravitating toward businesses with reliable cash flow, clean financials, limited owner dependence, and a clear path to financing,” BizBuySell President Bob House said in October, when the online marketplace released its third-quarter Insight Report. “Those qualities can make the difference between attracting interest and attracting serious offers.”
Brokers reported that 2,132 businesses were sold from July through September, down 7% from the same quarter a year earlier. Median sale price climbed 17% year over year, to $350,000, though it held flat from the second quarter.
“The biggest wave of business sales in a generation will expose how few owner-run companies are actually sellable,” Nicholas Mukhtar wrote this fall in reply to a question about the boldest prediction he would stake his reputation on for the next two years. “Owners who built businesses that run without them will get premium multiples. Those who are the business will discover it’s worth a fraction of what they assumed.”
Tera Strategies, the firm he runs in Fort Lauderdale, works with business owners on governance and operations.
More than a quarter of owners who plan to exit, 27%, said the current market has them moving up their sale. Fourteen percent are holding off, and close to half haven’t changed course. Within that group, 23% said they’re putting AI tools in place to lift the company’s value.
What small-business buyers reported in Q3 2026
For 31% of buyers in BizBuySell’s survey, the main obstacle was locating a good business to buy. Financing was cited second, by 15%, and seller asking prices third, by 13%. Nearly eight in 10 buyers expect to finance a purchase with a Small Business Administration loan.
Close to half considered current listings overpriced, and 40% said a purchase a year earlier would have served them better. Buyer confidence fell from 52 to 49 on the report’s 0-to-100 scale, while seller confidence slipped from 48 to 47. According to the accompanying release, both measures have now declined year over year for two straight years, a first since BizBuySell began tracking sentiment in 2013.
Most owners, nearly three in four, reported higher fuel and energy bills. Sixty-seven percent said inflation hadn’t let up, and more than half saw customers pulling back on spending. Max Friar of Calder Capital in Michigan said in the report: “There is a material wearing down of owners and a material level of stress on both buyers and sellers given the combination of these items. But none individually are essentially blowing up deals. It’s just a collective slow grind.”
Sold businesses posted a median $669,801 in revenue, up 3%, and $156,000 in cash flow, up 5%. Average multiples rose 2.6% on cash flow and 3.5% on revenue.
Sales above $1 million accounted for 22% of the quarter’s deals, a record share for the report. Their median price was $1.8 million, and they were sold at an average 100.8% of asking, compared with 93.6% for smaller deals, whose median price was $250,000. Average cash flow multiples ran 3.73 times above the threshold and 2.30 times below it.
Service companies accounted for the most sales of any major sector, 992, an increase of 10% over the second quarter and 9% over the prior year. Retail sales fell 12% year over year, to 417, even as the median retail sale price rose 13%, to $272,500. Restaurant sales fell 23%, to 358. Manufacturing’s median sale price jumped 58%, to $807,000, and its average cash flow multiple of 3.02 times topped the major sectors.
Fred Petito, a broker with Transworld Business Advisors in New Jersey, said in the report: “Buyers are more cautious with businesses exposed to thin margins, high fixed costs, or a heavy reliance on the owner. That is typically the case with restaurants and retail, but I wouldn’t say these entire sectors are ‘out of favor.’ A well-run business with solid earnings can still attract interest in a challenging sector, where a weaker business can struggle in a popular one.”
Seventy-three percent of brokers saw the quarter’s activity hold or improve, and 66% predicted more deals in the next six months. Compared with a year earlier, 67% said they were meeting more first-time entrepreneurs, and 37% more buyers coming from corporate careers. Closed sales are reported to BizBuySell voluntarily by brokers, and the company draws on roughly 50,000 businesses listed for sale and recently sold. Sample sizes for its buyer, owner and broker surveys aren’t published.
Owner dependence and business valuation
The McFarland Group’s new Transferable Value Index tries to gauge how much of a closely held company’s value would carry over to a buyer once the owner leaves. Through a free, 12-question assessment, each business is scored from zero to 100 on two dimensions, business durability and owner independence, and placed in one of four categories.
Among 52 businesses assessed through July 9, the weakest factor was who decides where the company goes next, which averaged 2.94 on a five-point scale. Customer diversification came next at 3.23. Businesses rated highly transferable averaged 3.30 on that same direction-setting question, against 4.58 on client relationships and 4.12 on closing new business.
BVWire reported: “Among the 30 highest-scoring businesses, 18 still relied solely on the owner to determine what the company would pursue next.”
Fifty-two businesses is a small sample, and BVWire doesn’t say how they were chosen. According to the firm, owner dependence figures into how buyers, lenders and successors assess price, deal structure and financing. Its published results include no sale prices, and the firm expects to publish more as additional responses come in.
Nicholas Mukhtar’s 80% test
Asked for a number he tells clients that always makes them sit up straighter, Nicholas Mukhtar answered “80%.” He said:
I often tell business owners to consider how much of their company’s day-to-day decision-making still depends on them. If that number is 80%, they haven’t built a scalable business. They’ve built themselves a very demanding job.
He added: “One of the biggest challenges I see with entrepreneurs is confusing being indispensable with being successful.”
What he looks for in the first 10 minutes
On what he notices first within 10 minutes of walking into a business, Nicholas Mukhtar said: “I pay attention to how decisions get made when the owner isn’t in the room. Do people know what they can handle themselves, or does everything have to go back to the top? You can learn a lot about a company’s leadership and culture from that one distinction.”
This content is provided for informational purposes only and is not a substitute for professional advice. AFP editorial staff were not involved in the creation of this content.
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