Small Business Exit Planning: Market Trends and the Year Ahead
Small businesses are the backbone of the U.S. economy, with those employing fewer than 500 people comprising nearly 99.90% of all American businesses. These enterprises serve as community cornerstones—providing essential services, creating local jobs, and enhancing both the economy and cultural fabric of the neighborhoods.
According to BizBuySell's quarterly Insight Report, which tracks the health of the small business-for-sale market, today's small business landscape is dominated by micro-businesses. The majority of small business owners (32.88%) are sole proprietors, while 43.47% operate with small teams of 1-5 employees. Only 11.05% employ 6-10 people, and just 12.60% have workforces with more than 10 employees. This prevalence of micro-businesses shapes not only the current market but also influences how owners approach their exit strategies.
Understanding Exit Planning
With many small business owners approaching retirement age or considering their next ventures, exit planning has become increasingly important. Exit planning is the process of preparing a business for sale or transfer of ownership. Business owners have several options, including:
- Selling to a third party
- Transferring the business to family members
- Selling ownership to employees
- Exploring other transition approaches
A well-executed exit plan maximizes business value while ensuring a smooth transition for everyone involved.
Current Exit Planning Trends
BizBuySell's Q4 2024 Insight Report reveals a shifting landscape:
- 42.98% of small business owners plan to sell their business in the next few years (down from 53.64% in Q4 2023)
- Retirement remains the primary motivation for selling, though the percentage citing retirement has decreased nearly 10% year-over-year
- Many owners are selling to pursue other business opportunities—buying, growing, and selling businesses has become a path for serial entrepreneurs
This shift coincides with the "Silver Tsunami" and "Peak 65"—the period from 2024 through 2027 when more Americans are turning 65 than at any other time in history. This demographic wave creates opportunities for aspiring entrepreneurs to acquire established, successful businesses.
Preparing to Sell a Small Business
Documentation and financial transparency are cornerstones of a successful business sale. Properly maintained records not only justify your asking price but also streamline the due diligence process and build buyer confidence.
Financial Documentation Trends
The Insight Report reveals 65.02% of business owners report having three or more years of accurate accounting records to support their business valuation—a decrease from 71.97% in the previous year. Meanwhile, 14.08% acknowledge not having adequate documentation (up from 12.03%), and 20.90% have been in business less than three years (up from 15.99%).
These figures highlight an opportunity for prepared sellers to standout in the marketplace. Well-documented businesses enjoy significant advantages, including:
- A strong negotiating position with evidence-backed valuations
- Smoother due diligence processes that build buyer confidence
- The potential for more favorable financing options for potential buyers
Recommendation: Even if you’re years away from selling your small business, prioritize establishing clean financial records now. Working with accounting professionals to implement proper bookkeeping systems can enhance business value and marketability when it's time to sell.
Understanding Your Business’s Worth
Knowing your business's market value sets the foundation for realistic expectations throughout the sales process.
Current Valuation Awareness
The Insight Report found 14.97% of business owners have obtained a professional valuation from a business broker or appraiser (down from 19.92% in Q4 2023). Meanwhile, 52.46% report having a rough estimate of their business's worth (down approximately 5% year-over-year), and 32.57% acknowledge they don't know what their business is worth in today's market.
Businesses with accurate, third-party valuations benefit from:
- Data-driven pricing strategies that attract serious buyers
- Stronger negotiating positions based on documented business value
- Enhanced credibility with buyers, lenders, and other stakeholders
- Clearer understanding of value drivers that can be optimized before the sale
Looking ahead, business owners remain optimistic, with 64.82% expecting their business value to increase over the next year. Only 6.16% anticipate a decrease, while the remaining respondents project stable values (20.04%) or are uncertain about future trends (8.98%).
Recommendation: Business owners planning an exit within the next 1-3 years should consider getting a professional valuation now. This helps to establish a realistic asking price and identify specific areas where value can be enhanced before going to market.
Understanding Buyer Motivations and Timelines
Successfully positioning your business for sale requires understanding buyer expectations and acquisition timelines.
Accelerating Acquisition Timelines
Today’s buyers are operating on increasingly reduced timelines compared to last year:
- 16.30% seek to complete an acquisition within 3 months (up from 13.34%)
- 19.53% aim to close within 6 months (up from 16.25%)
- 6.60% target a 9-month acquisition window (up from 5.68%)
- 20.05% plan for completion within 12 months (similar to 20.34% in 2023)
Notably, 62.48% of prospective buyers now intend to buy a business within the next 12 months—an increase from 55.61% in Q4 2023. This accelerated timeline suggests growing buyer urgency that sellers can leverage.
Recommendation: If you’re entering the business for sale market in 2025, prepare for due diligence in advance to meet this buyer momentum. Having key documents, financial statements, customer data, and operational procedures thoroughly organized before listing can be a competitive advantage.
Bridging the Valuation Perception Gap
One of the bigger challenges in the business sales marketplace is the difference in how buyers and sellers perceive business valuations.
Current Pricing Perceptions
The Insight Report reveals a valuation disconnect between small business owners and prospective buyers. 62.10% of buyers believe businesses on the market today are overpriced while only 19.35% consider current listings to be appropriately priced. Less than 1% (0.94%) believe businesses are underpriced and 17.61% are unsure about the price of businesses for sale in the current market.
This perception gap presents both a challenge and an opportunity for sellers. Those who can effectively bridge this divide gain a market advantage through:
- Supporting asking prices with objective, third-party valuations
- Offering creative deal structures that address buyer pricing concerns
- Being prepared to communicate the true value of the business beyond financial statements
Recommendation: Rather than focusing solely on the final asking price, sellers should develop narratives that help potential buyers understand the true worth of their business. Combined with flexible deal structures like earnouts or seller financing, this approach can help bridge the gap and ensure successful transactions.
Market Outlook: Navigating the 2025 Landscape
Despite shifting preparation levels among sellers and evolving buyer timelines, the small business-for-sale market presents valuable opportunities.
To ensure success, sellers can begin planning their exit by maintaining financial documentation, conducting valuations to establish market-appropriate pricing, and developing flexible and creative deal structures
Ready to take the next step? Visit BizBuySell’s Business Broker Directory to find a broker to help you navigate the complexities of today’s market and maximize your business's value.