Deal activity in the small business market is heating up despite widespread economic uncertainty putting pressure on margins and long-term confidence. According to new data from BizBuySell’s Q3 2025 Insights ReportThe number of completed sales for small and medium-sized businesses was 2,599, a surge of 8% compared to the same period last year and 11% compared to the previous quarter. The total value of the deal reached $2.13 billion.
At first glance, this growing acquisition trend may suggest growing optimism. But when you look more closely, the reality for small business owners turns out to be a bit more nuanced. The reality is that many companies are selling out of concern, not confidence.
On BizBuySell’s Buyer-Seller Confidence Index, owner confidence fell from 50 to 48, falling below neutral. This decline is primarily due to the financial damage caused by ongoing inflation and increased costs from tariffs. In fact, more than half (53%) of small business owners surveyed said tariffs had increased their operating costs, while 62% said inflationary pressures had not yet eased.
“The stuff is expensive, especially the insurance and maintenance costs, and it’s hard because we’re a small company,” said Donny Ravas, owner of Dell Transport in West Virginia. “In January 2026, we’ve been around for 27 years and have seen just about everything, but we’re running out of fuel.”
With inflation reducing profitability and many owners considering retirement, more and more people believe now is the right time to sell. According to the report, 55% of business owners believe they can achieve the price they want today, while 60% worry that waiting until next year could result in the same or lower price.
Nonetheless, buyers aren’t waiting either. Trading cycles are moving faster than they were a few years ago. The average time companies spent on the market in the third quarter was 149 days, down from 176 days in the second quarter and the fastest pace since 2017. This speed signals a sense of urgency among buyers to close a deal when prices are good.
Despite the urgency of the situation, sales prices are falling. The median sales price in the third quarter was $320,044, down 2% year over year and down 9% quarter over quarter. This trend reflects the seller’s weakening financial performance, with interim cash flow and revenue declining 2% year-over-year and 6% quarter-over-quarter, respectively.
Buyers don’t necessarily negotiate better deals. As costs rise, seller profitability decreases. As a result, valuations are taking a hit, even though buyer interest remains strong.
This interest is reflected in relatively stable buyer sentiment. The Buyer-Seller Confidence Index fell slightly from 54 to 52, but the majority of buyers still feel positive about their prospects. A full 77% believe they can buy a business at a fair price today, and 78% expect to find similar or better value next year.
“There are more buyers than sellers,” said Joe Braier of Lake Country Advisors. “Sellers with good cash flow in desirable industries typically choose from multiple LOIs.”
This imbalance makes business ownership particularly attractive to unemployed professionals. According to the report, 40% of today’s buyers are «corporate refugees,» many of whom are mid-career professionals in the 40- to 59-year-old age group who see acquisitions as a pathway to autonomy and income.
In particular, the upward trend is most noticeable in the service and distribution industries. Service trades increased 11% year-on-year, while retail trades increased 14%. Buyers appear to be gravitating toward essential service categories such as HVAC, plumbing, roofing and landscaping. These industries are considered resilient to economic downturns.
“The markets for HVAC, P&H, electrical, roofing, landscaping, etc. are still hot,” said Adam Pratt of Atlantic Business Brokers in Maine. “I have over 300 active buyers in my database. There are not enough listings for all of them.”
But these deals are headed toward more moderate valuations. The average selling price in the hospitality industry fell 8% year-over-year to $300,000, with cash flow down 15%. Retail business sales followed a similar pattern, with selling prices down 5% and cash flow down 4%.
Restaurants also remained relatively stable, with transactions completed in the third quarter up 2% year over year and up 27% quarter over quarter. The segment grew cash flow by 4% and revenue by 8% year-on-year, suggesting it has some resilience despite ongoing headwinds. Operators have adapted by narrowing their menus, streamlining operations and focusing on key, profitable items.
Meanwhile, the manufacturing industry took a step back. Transactions in the sector were down 11% from last year, with the median sale price down 37% to $550,000. Sales and cash flow also plummeted by 27% and 28%, respectively. Tariffs and supply chain issues have created an environment of hesitation, with many buyers holding off or postponing transactions until the outlook becomes clearer.
Macroeconomic conditions continue to weigh heavily on the decisions of small and medium-sized businesses. Tariff uncertainty, inflation, and the possibility of further government shutdowns are all uncertain. But despite these challenges, the entrepreneurial engine remains active and is increasingly driven by strategic exits and value-driven acquisitions.
This is especially evident in AI adoption in small and medium-sized businesses. The report found that 55% of owners are using AI tools primarily for marketing (69%), analytics (56%), and customer service (39%). And they are seeing results. 76% say AI has improved performance.
While AI adoption has led to the reduction of some roles (13% of companies reported a reduction in workforce size since implementing AI), 5% of respondents have also created new roles. As AI continues to mature, its impact on staffing, costs, and productivity is expected to grow, giving small and medium-sized businesses another avenue to leverage as they navigate complex environments.
Going forward, retirement continues to drive seller motivation, with 42% citing retirement as their primary reason for listing their business. This trend is likely to continue, especially as more baby boomers leave the workforce. The message brokers are sending to owners in this position is clear. In other words, focus on your readiness, not your market readiness.
«Sell when you, your family, and the company are ready. Don’t let economics get in the way,» advises Bill White of Murphy Business & Financial Corp. in Ohio. “In the end, there won’t be that big of a change.”
With the Federal Reserve expected to cut further interest rates this year and into 2026, borrowing could soon become cheaper, potentially spurring more trading activity. But even without such tailwinds, the small business acquisition market shows signs of resilience and adaptability.
Buyers are offered the opportunity to secure essential service business at competitive prices. For sellers, especially those nearing retirement or facing cost pressures, the current market offers a real, if slightly imperfect, opportunity to exit on reasonable terms. And for everyone involved, remaining focused on long-term fundamentals and operational excellence may be the best way to navigate an uncertain future.
Image via BizBuySell
