Q3 2025 Small Business M&A Market Report: Trends & Insights
The Market Is Evolving- Not Collapsing
According to the BizBuySell Q2 2025 Insight Report, 2,342 small businesses changed hands in Q2- down just 4% year-over-year and 1% from the prior quarter. But that dip is largely driven by a steep 28% decline in manufacturing transactions. Other sectors- especially retail and service- remain active and healthy.
The Axial Q2 2025 SMB M&A Pipeline confirms this broader trend: deal volume across all seven of Axial’s tracked industries increased year-over-year, with the biggest growth in Business Services (+47%), Food & Hospitality (+43%), and Healthcare (+39%). This growth reflects continued confidence among sellers and a robust deal pipeline heading into the second half of the year.
Sellers Still in Strong Position- If Prepared
Retail businesses saw a 13% increase in median sale price on BizBuySell, and service-based businesses posted a 7% increase in transactions. Buyers are actively pursuing recession-resilient, essential businesses. Axial also reports strong pursuit rates in Industrials and Technology, reflecting buyer demand for stability and scalability.
Despite a 6% dip in overall median sale price, much of that is due to smaller average deal sizes and the slowdown in manufacturing. Businesses that are organized, have clean books, and are priced right continue to attract strong offers.
Navigating New SBA Lending Rules
Recent changes to SBA guidelines are reshaping how deals are financed. Seller notes used as part of a buyer’s equity injection must now be on full standby for the life of the loan- and can only account for up to 50% of the total equity injection. According to BizBuySell, this added complexity may be contributing to a 12-day increase in average time on market.
Still, deals are getting done. Sellers who stay flexible- and work with experienced advisors - can structure terms that meet SBA requirements while still commanding strong valuations. Smart seller financing and prequalified buyers are key to keeping closings on track.
Buyers Are Motivated- and Well-Prepared Businesses Sell
Buyer activity is holding strong. According to BizBuySell, 45% of today’s buyers are career professionals making a move toward entrepreneurship, and many are prioritizing essential businesses. On Axial, sectors like Technology (ranked #1 in pursuit rate) and Transportation (ranked #3 despite lowest deal volume) show that high-quality, well-positioned businesses are attracting competition.
Inventory Is Low- That’s Good for You
A limited number of listings-especially from baby boomer owners who are still holding off on retirement- is driving increased competition for high-quality businesses. This puts sellers in a strong position, especially if their business is showing positive trends and operational independence.