Key Highlights:
- Transactions down 4% year-over-year and 1% quarter-over-quarter
- Median sale prices fall as buyers pursue lower-cost opportunities
- SBA lending changes, inflation, and tariffs complicate dealmaking
- Retail and service sectors show resilience; manufacturing plunges 28%
Business-for-sale activity in the second quarter of 2025 showed signs of strain, reflecting the cumulative impact of a decade marked by economic volatility, shifting immigration policies, and global trade tensions. According to BizBuySell, 2,342 businesses changed hands in Q2—down 4% from the same period last year and 1% from Q1.
This decline follows years of economic turbulence, including the COVID-19 pandemic, persistent inflation, and geopolitical disruptions. While early 2025 began with momentum, recent tariff announcements by the Trump administration have introduced fresh uncertainty, particularly for businesses dependent on imports.
“Buyers are pausing to assess how tariffs will affect financial performance, especially for businesses with global supply chains,” said Dustin Zeher of Horizon Business Brokers, LLC.
Inflation, Tariffs, and Immigration Policy Weigh on Small Businesses
Small business owners continue to face elevated costs driven by inflation and trade policy. Nearly half (46%) report increased expenses due to tariffs, while 55% say inflation remains a challenge. In response, 66% have raised prices—though customer reactions are mixed.
“Some customers understand the pressures. Others are frustrated by the price hikes,” said Drew Vennemeyer of Dwell Construction.
These pressures are reshaping deal sizes. Q2 deals generated $1.9 billion in total enterprise value, down 4% year-over-year and 6% from Q1. The median sale price fell 6% to $352,000, while median cash flow declined 2.6%. Revenue remained steady.
SBA Lending Tightens Amid Policy Reversals
New SBA lending rules—reversing more flexible Biden-era policies—have added complexity to business acquisitions. These include:
- U.S. citizenship requirements
- Stricter credit checks
- Tighter debt service coverage ratios
- Limits on seller financing as part of equity injection
Effective June 1, seller notes can only cover up to 50% of the buyer’s required equity injection and must be on full standby—meaning no payments until the SBA loan is repaid, often over 10 years.
“SBA lending has become a real challenge with new federal regulations,” said Mark Kincannon of Resolution Equity Partners.
Further complicating deals, sellers retaining equity must personally guarantee the loan for two years, and partial ownership transfers must now be structured as stock sales—raising tax and liability concerns.
This has widened the gap between buyer expectations and seller willingness to offer financing. Only 23% of owners plan to offer seller financing, while 62% of buyers expect it.
Longer Timelines and Strategic Structuring Needed
Due to these challenges, 41% of brokers report delays, and the average time on market has increased by 12 days year-over-year. Sellers are encouraged to work closely with brokers to structure deals creatively—such as offering seller notes in addition to, rather than part of, the buyer’s down payment.
Buyers should be proactive: 68% are considering SBA loans, but 55% are unaware of the new rules. Prequalification and proof of funds are essential.
“Don’t lead with ‘Will the seller finance?’—come prepared with financing and credibility,” advises Jeff Miller of Transworld Business Advisors.
Buyers Seek Stability in Recession-Resistant Sectors
Despite economic uncertainty, demand remains strong for businesses with stable cash flow and loyal customers. Service-based and recession-resistant businesses are top priorities for buyers—73% and 64%, respectively.
“Good businesses sell quickly and at premium prices. Unrealistically priced ones get passed over,” said Lee Sheaffer of BizReady, Inc.
The buyer pool is evolving, with more “corporate refugees” entering the market—45% of buyers now identify as such, up from 36% last year. Another 15% are unemployed, reflecting a shift toward entrepreneurship.
“Many professionals are seeking financial opportunity and adventure through business ownership,” said John Pastoor of Calder Capital.
Sector Performance: Retail and Services Up, Manufacturing Down
Retail businesses saw a 2% increase in transactions and a 13% rise in median sale price. Cash flow jumped 14%, while revenue held steady. Essential retail operations—like grocery and pharmacy—continue to attract buyers.
Service businesses also performed well, with a 7% increase in transactions. However, median sale price fell 5%, and cash flow dipped 3%, while revenue rose 5%.
“Home services, healthcare, and logistics remain in high demand,” said Matt Baas of Calder Capital.
Manufacturing, however, saw a sharp 28% drop in transactions. Tariff-related uncertainty has made planning difficult, reducing buyer confidence. Median sale price fell 7%, cash flow dropped 19%, and revenue declined 26%.
“Tariffs are quietly reshaping the market, especially for globally dependent sectors,” said Vipin Singh of Murphy Business Sales.
Restaurant acquisitions also declined 16%, despite a 3% rise in sale price. Profitability remains challenged due to high food costs and inflation, with cash flow down 8% and revenue up 6%.
Outlook: Uneven Growth Amid Global and Domestic Challenges
Looking ahead, moderate growth is expected, driven by motivated buyers and selective demand. While most buyers (70%) say tariffs aren’t delaying their plans, tighter SBA lending and geopolitical uncertainty—including immigration policy shifts—may reduce the pool of qualified buyers and extend sale timelines.
Expert Advice for Buyers and Sellers
Buyers:
- Get prequalified with lenders
- Present yourself as a credible, prepared candidate
- Move quickly when a good opportunity arises
Sellers:
- Understand realistic valuations
- Be open to flexible deal structures
- Consider seller financing to attract buyers
“There’s never a perfect time to buy or sell. Be prepared, be flexible, and act decisively,” said Michael Shea of Transworld Business Advisors.
Michael Shea represents the Tampa Florida Transworld office. In business since 2005, he has established a reputation as a trusted business broker across Florida’s key markets- from Tampa to Orlando, Melbourne, and more. Over the past two decades, Michael and his team have closed over $1 Billion in sold business volume and presided over more than 450 transactions. His credentials include the IBBA Certified Business Intermediary®, and most recently, the prestigious Certified Exit Planning Advisor® (CEPA) credential.