Acquisitions of Service Businesses Remain Strong

Steady cash flow, low risk and future growth are considerations when buying a business. They are attributes often found in service businesses which is the largest sector of small business acquisitions. According to BizBuySell’s Insight Report, 39% of acquisitions in 2022 were service businesses, up 7% over the previous year.

Despite current economic challenges, inflation and interest rate hikes, service businesses sold in 2022 showed strong performance. Median revenue rose 3% year-over-year.

While no business is truly risk-free, many service businesses are considered ‘recession resistant’ and highly desirable during economic uncertainty. Businesses such as health care, IT consulting, plumbing, or even pest control, are essential to everyday life. Services and essential businesses experienced solid financial performance and are highly sought after on the business-for-sale market.

Most service businesses specialize in intangible product offerings and therefore not subject to supply chain issues or inflation driving up costs of inventory or raw goods.

An already established service business has built-in cash flow, a proven business model, trained employees, as well as a customer base and a recognized brand. The first challenge is finding a service business that is the right fit for you.

Tips for finding a Service Business for Sale:

At first, finding the right service business for sale may seem overwhelming. You may already be browsing opportunities on business-for-sale marketplaces. You can narrow the possibilities and get a clearer and more picture by first identifying your ideal acquisition target.

  • Choose a business that fits your lifestyle and skills:  If you’re looking to buy a service business, consider an industry that matches your experience. For example, if you have worked in healthcare management or finance, you might consider medical billing. ‘
  • Look at each opportunity carefully. Once you find a business that seems appealing to you, speak with the sellers and ask questions. Review the financial records.. Do you see any growth potential? If it seems like a good opportunity, consider making an offer.
  • Rely on professionals during negotiations and closing. There are many steps involved in the process of buying a business. However confident you may feel about the opportunity, a business broker and attorney each serve important roles – from connecting you with the right opportunity to protecting you from liability.
  • Consider multiple financing and purchase options. When it comes to purchasing a small business, there are a myriad of ways you can structure the deal. However, most are done through a combination of cash and seller financing.

Contact Business Brokers Plus to learn how we can help you.