The looming recession, high cost of funds, and inflation have slowed the momentum from the covid rebound we experienced from Q3 2020 to Q1 2022.
Small businesses and main street businesses typically feel the impacts of these conditions more than larger companies. Interest rates increased throughout 2022. This increased cost of funds and tighter lending climate will have a negative impact on business valuations. I expect an increase in seller financing, earnout, and other contingent payments to bridge the valuation gaps.
Greater Atlanta is a growing metropolis, expected to grow from 6.2M to 9.5M people in the next 30 years. Only Dallas +5M, Houston +4.5M, and Phoenix +3.3M are expected to grow by more people.
Along with population growth, financial economics are trending upward, and the popularity of the city remains strong.
Total closed transactions in Greater Atlanta increased by 9.3% compared to 4.7% nationally. The next chart tells a story for 2022 that shows downward momentum.
National trends show a peak in Q2 2022 and 3 straight quarters of decline since.
Greater Atlanta had a strong Q4 that slightly exceeded the national Q2 peak.
Q4 valuations saw a significant dip. Atlanta's valuations typically do not vary far from the national average, Q4 saw a 24% dip. Q1 2023 numbers will help us show if this was an anomaly or a trend.
The median sales price dipped sharply in Q4 after trending up over the last year.
Revenues, profitability, and valuations all declined in Q4 after having a strong run-up from Q2 2021 - Q1 2022. Profitability (cash flows) has been declining since the Q1 peak.
If you own a business and you want to start preparing for your exit, please contact me for a free valuation and consultation on preparing your company for sale.
ABOUT THE BIZBUYSELL.COM 2022 INSIGHT REPORT
Some of the data analyzed were taken from BIZBUYSELL.COM Insight Report. This report compiles data from the transactions listed on the BizBuySell.com platform, the nations leading platform for the sales of small businesses.