Deal activity in the small business marketplace is heating up, even as broader economic uncertainties put pressure on margins and long-term confidence. According to new data from BizBuySell’s Q3 2025 Insight Report, the number of completed small business sales surged to 2,599 — an 8% increase from the same period last year and an 11% jump from the previous quarter. The total value of those transactions reached $2.13 billion.

At first glance, this upward trend in acquisitions might suggest growing optimism. But a closer look reveals a more nuanced reality for small business owners: many are selling not out of confidence, but out of concern.

Owner confidence has dropped below neutral on BizBuySell’s Buyer-Seller Confidence Index, sliding from 50 to 48. That dip is largely attributed to the financial toll of ongoing inflation and tariff-driven cost increases. In fact, more than half (53%) of surveyed small business owners report higher operating costs due to tariffs, while 62% say inflationary pressures have yet to ease.

“Things are expensive, especially insurance and maintenance costs. We’re a small company, so it’s tough,” said Donny Ravas, owner of Dell Transport in West Virginia. “We’ve been around for 27 years in January 2026 and have seen just about everything. Fuel has come down, though.”

With inflation eating into profitability and many owners eyeing retirement, a growing number believe now is the right time to sell. In the report, 55% of business owners said they think they can achieve their desired price today, and 60% worry that waiting until next year could result in the same or even lower offers.

Still, buyers aren’t waiting either. Deal cycles are moving faster than they have in years — businesses spent a median of just 149 days on the market in Q3, down from 176 days in Q2 and the fastest pace recorded since 2017. This speed signals urgency among buyers who want to secure deals while prices are favorable.

Despite that urgency, sale prices are slipping. The median sale price in Q3 fell to $320,044, down 2% year-over-year and 9% quarter-over-quarter. This trend reflects weakening financial performance among sellers, with median cash flow and revenue each down 2% YoY and 6% QoQ.

It’s not necessarily that buyers are negotiating better deals — it’s that higher costs are eroding seller profitability. As a result, valuations are taking a hit even as buyer interest remains strong.

That interest is reflected in relatively stable buyer sentiment. While the Buyer-Seller Confidence Index dropped slightly from 54 to 52, a majority of buyers still feel positive about their prospects. A full 77% believe they can purchase a business at a fair price today, and 78% expect to find comparable or better value in the year ahead.

“There are many more buyers than there are sellers,” said Joe Braier of Lake Country Advisors. “Sellers who have a good cash flow business in a desirable industry are typically choosing from multiple LOI’s.”

That imbalance has made business ownership particularly attractive for displaced professionals. According to the report, 40% of today’s buyers are “corporate refugees,” many of whom are mid-career professionals in the 40–59 age bracket who see acquisition as a pathway to autonomy and income.

Notably, the service and retail sectors are seeing the most momentum. Service business transactions rose 11% year-over-year, while retail saw a 14% increase. Buyers appear to be gravitating toward essential service categories like HVAC, plumbing, roofing, and landscaping — industries considered recession-resilient.

“The market is still hot for HVAC, P&H, Electrical, Roofing, Landscaping, etc.,” said Adam Pratt of Atlantic Business Brokers in Maine. “I have 300+ active buyers in my database. There are not enough listings for all the buyers.”

However, those deals are trending toward more modest valuations. The median sale price of service businesses fell 8% YoY to $300,000, with a 15% drop in cash flow. Retail business sales followed a similar pattern, with sale prices down 5% and cash flow down 4%.

Restaurants also held relatively steady in Q3, with a 2% year-over-year uptick in completed deals and a 27% jump quarter-over-quarter. The sector posted a 4% YoY increase in cash flow and an 8% boost in revenue — suggesting some resilience despite persistent headwinds. Operators have adapted by narrowing menus, streamlining operations, and focusing on profitable staples.

Meanwhile, manufacturing took a step back. Transactions in the sector declined 11% from last year, with the median sale price tumbling 37% to $550,000. Revenue and cash flow also dropped sharply — down 27% and 28%, respectively. Tariffs and supply chain issues have created an environment of hesitation, with many buyers holding back or delaying deals until the outlook becomes clearer.

The macroeconomic picture continues to weigh heavily on small business decisions. Tariff uncertainty, inflation, and the possibility of further government shutdowns all cloud the horizon. Yet despite those challenges, the entrepreneurial engine remains active — and increasingly driven by strategic exits and value-focused acquisitions.

That’s particularly evident in the adoption of AI among small businesses. The report found that 55% of owners are using AI tools, primarily for marketing (69%), analytics (56%), and customer service (39%). And they’re seeing results: 76% say AI has improved their performance.

While AI adoption has led to some role reductions (13% of businesses reported a smaller workforce since implementing AI), it’s also created new roles for 5% of respondents. As AI continues to mature, its impact on staffing, costs, and productivity is expected to grow, offering small businesses another lever to pull as they navigate a complex environment.

Looking ahead, retirement continues to drive seller motivation, with 42% citing it as the primary reason for listing their business. That trend is likely to persist, especially as Baby Boomers exit the workforce in greater numbers. For owners in this position, the message from brokers is clear: focus on your readiness, not the market’s.

“Sell when you, your family, and your company are ready. Don’t let the economic factors stand in your way,” advised Bill White of Murphy Business & Financial Corp. of Ohio. “In the end, it won’t make that much of a difference.”

With the Federal Reserve projecting additional interest rate cuts this year and into 2026, borrowing may soon become more affordable, potentially fueling even more deal activity. But even without that tailwind, the small business acquisition market shows signs of resilience and adaptability.

For buyers, the landscape offers a chance to secure essential service businesses at competitive prices. For sellers, especially those nearing retirement or facing cost pressures, the current market presents a real — if slightly imperfect — opportunity to exit on reasonable terms. And for all involved, staying focused on long-term fundamentals and operational efficiency may be the best way to navigate the uncertain road ahead.

Images via BizBuySell

This article, “Small Business Sales Surge as Owners Exit Amid Inflation Pressures” was first published on Small Business Trends