Is this a Sellers' Market? And for how long?

February 16, 2024

by a searcher from University of Southern California in Mid-Atlantic, USA

I was recently talking with an SBA lender and we agreed it's been a sellers' market as of late - and it may be tough to tell how long that might last.

Separately, I see there have been about 400k tech workers laid off from various companies between 2023 and now. This seems like a large pool of highly educated, entrepreneurial professionals who are potentially disillusioned by their career path. Many received buyouts or severance, etc. to leverage on a potential business acquisition. At the same time, SBA just dramatically changed its 7a program to improve transaction efficiencies.

I just wanted to touch base with the SF Community and get your take on this. Are the tech-unemployed soon to become the largest pool of prospective EtA buyers? Does this keep us in the sellers' market for the foreseeable future? If so, does the increase in the number of prospective buyers help to meet the projected pool of Baby Boomer sellers? Does this increase in the number of both capable buyers and willing sellers dramatically increase the number of transactions taking place? Is this Nirvana for intermediaries?

Forgive me if someone has already plowed this ground. Asking for a friend :)

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

I believe your assessment is fairly accurate. I think between the pandemic giving people a desire to control their own destiny and the general growth and knowledge of entrepreneurship, has led to a large number of prospective buyers making it a sellers market. There are also only so many sellers out there with quality businesses, although that number seems to be growing slightly due to the baby boomer population aging out. Although dollars are still flowing from Banks on the SBA side, I have seen a tightening of credit from traditional banks and other lenders, which I think will make it more challenging for some searchers to buy businesses. But at least in the near term, I think it is going to be more of a sellers market than a buyers market.

Reply by a searcher
from University of Southern California in Mid-Atlantic, USA

^redacted‌ As always, I appreciate your insight. I think also of note is the sheer volume, and possibly quality, of information and support now available to prospective buyers. If nothing else, this may elevate the discourse between the parties (buyer, seller, and intermediaries).

A successful buyer who acquired back in 2017 recently said that way back then, they just called it "buying a business." Now we appear to have all joined the "EtA Community."

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