What’s the market like now for selling an online business?

With the recent fallout of Silicon Valley Bank, some entrepreneurs who’d planned to sell are asking whether now is still the right time.

The truth is, whether it’s the right time to sell your company is based on lots of factors. Yes, market outlook is one of them, but you also want to consider the performance of your business, trends in your particular space, and your own personal bandwidth for continuing to grow the company.

Still, we hear business owners digging on whether it’s a seller’s or buyer’s market, how the SVB fallout is affecting the acquisition landscape, and how you should navigate current market conditions.

We asked players in the space, including M&A brokers and active buyers, some of your burning questions, including:

  1. What’s the market like right now for selling a business?
  2. Is the SVB fallout affecting the acquisition climate?
  3. Have some buyers paused acquisitions?
  4. Anything else you think is important?

Here’s what they told us.

1. What’s the market like right now for selling a business?

“The market is generally still stable but naturally there is an undercurrent of nerves and the froth has definitely come off the top… Multiples are starting to come down, businesses are staying on the market longer, and sellers are typically accepting less cash up front, but it is still a seller’s market. It’s not a terrible time to sell, but not as frothy as 2021.”

Dominic Wells, founder of Onfolio, a firm that buys online businesses

“There’s no doubt that 2022 was rough. At the tail end of 2022 and into 2023 activity has definitely picked up. There was less of a valuation expectation gap as founders realized that 2021 was not the new normal and buyers stopped being quite so spooked the world was going to end.”

Einar Vollset, managing partner of Discretion Capital, which brokers B2B SaaS deals, and general partner at TinySeed, a SaaS accelerator

“The market is aggressive right now with a 0.5 drop in multiples. For example, companies that were giving a 3x multiple, have dropped to 2.5x.”

–  Natarcia Codner, co-founder of Codner.co, a mastermind that sets up e-commerce owners to sell

“If you are a seller, expect compressed multiples compared to the last few years. Higher interest rates have pushed them down, and buyers are expecting better deals. The good news for sellers is that the buyers who are still around are well-qualified and ready to pull the trigger. They realize multiples are down, and if they have the cash to spend, they understand now is the time to buy.”

Justin Harris, a broker with Website Closers, which focuses on online companies

“Still a very hot seller’s market. We’ve actually seen an increase due to business acquisitions becoming very hot and trendy.”

Christine McDannell, business intermediary at The Magnolia Firm, a brokerage that helps founders sell

“Seems the tide is turning, becoming more of a buyers’ market. That said, buyers are proceeding with more caution, going a little bit heavier on diligence and mitigating downside risk more than they would have previously.”

Paul Kelley, VP of M&A Marketplace at Acquire.com, a marketplace that connects buyers and sellers

“The market has been slow compared to previous years. We still have buyers looking to buy businesses, but sellers have been slow on making decisions to move forward to sell their business. With the increase in interest rates, the weak economy and what I am calling ‘PTSD’ following Covid, it is causing fear and doubt with our sellers and buyers.”

Marla DiCarlo, CEO of BizNavigators, a brokerage that helps business owners sell

2. Is the SVB fallout affecting the acquisition climate? If so, how?

“Most banks have stopped lending, but there are still funds and other firms lending, so SVB hasn’t had a huge impact yet.”

– Wells of Onfolio

“I have not seen this have any impact on buyers being able to get their funds or receive funding. Interest rates are a bigger play here with the general macro-economy outlook.”

Ryan Condie, M&A advisor at Quiet Light brokerage, which supports founders selling online businesses

“We have yet to see it impact our buyers. There have been a few conversations surrounding it, but nothing that has changed a deal.”

– Harris at Website Closers

“I would argue that the impact of AI is currently having a more significant effect on the market than the recent bank fallout. Think about some of the models; a content website or an agency, various business models are being rapidly influenced by the new AI tools that are emerging almost daily, often built upon the foundation of ChatGPT.”

– Kelley at Acquire.com

SVB fallout has not affected acquisitions much… The same principles apply as before — a profitable business that provides solutions and understands its audience is still attractive to a sophisticated buyer.”

– Codner at Codner.co

3. Have some buyers paused acquisitions?

“Yes, some buyers have but most have not. There is still an unquenchable thirst from buyers with not enough businesses going to market.”

– Condie at Quiet Light

“There are fewer buyers in the market, but the ones left are ready to buy. There was a pause mid-year last year, but now activity is back up.”

– Harris at Website Closers

4. Anything else you think is important?

Multiples have come down since the peak of 2021 but multiples didn’t go into the dumps for good businesses. If you were going to get a 4x in 2021, you probably are at a 3.3-3.5x. If you were at a 3.5x, you’ll probably be in the 3x range, etc. The bigger piece is you can’t time the market. You can’t time things to be perfect in your business either. Selling needs to come from your own energy cycle on your own projects and when you think it’s time for you to move on. Pairing that with your ability to hit your exit goals is key.”

– Condie at Quiet Light

“The ‘market top’ is a mirage that you should probably ignore as a seller.”

–  Vollset at Discretion Capital

“If you are a seller, realize it’s not 2020; the multiples are compressed, and you have to deal with that reality if you want to exit.”

– Harris at Website Closers

“It’s becoming more and more of a buyers market as listings start to outweigh buyer demand… However, startups that are profitable, have great profit margins, and open to different deal structures are getting tons of activity upon going to market.”

Rainier Nanquil, M&A advisor at Acquire.com, a marketplace that connects buyers and sellers

“Don’t get discouraged. Of course the media needs to attract as many eyeballs as possible and it’s human nature for fear to get our attention… Be sure to seek out real-life examples.”

– McDannell at The Magnolia Firm

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