Although there is encouraging news about sales activity involving small and mid-sized businesses for sale in California--deals were up last month by about 2.5% compared to the closed escrows rate of November 2009--we’re not seeing consistent growth in activity on a month-to-month basis. Last month sales declined by about 29% to 978 deals from the total of 1,384 completed transactions recorded in October, the busiest month this year.
Sales activity started out pretty strong last month but there were very few escrow closings scheduled for the last week because of the Thanksgiving Holiday.
The count of completed deals was down in most of the state’s largest counties, with 213 transactions in Los Angeles County last month compared to 268 in November 2009 and 385 in October of this year. A total of 91 sales concluded in Orange County last month was a decline from 97 in November a year ago, and the county’s year high of 128 in October 2010. Last month’s totals in San Diego County (79) and in San Francisco (37) also were lower than the figures for the previous month and for November of last year. Sacramento County was an exception, with 42 sales last month, compared to 28 in November 2009 and 26 in October.
It may be several months before we see sales activity returning to levels that were recorded before the economic downturn referred to as the Great Recession. And yet I am reminded daily of the resourcefulness of California’s entrepreneurs, whether they are buyers, sellers or intermediaries. It appears more sellers are agreeing to help finance, and there is an increase in earn-out types of transactions. These are deals that allow the buyer to get in a business at the current--depressed--value, in return for an agreement to share the growth with the seller as the business improves along with a recovering economy.
Among the bright spots in our industry are the efforts by the SBA to encourage lending to small businesses for expansion and to help fund business sales. The Small Business Jobs and Credit Act passed by Congress last year is making more money available to the SBA so it can back lenders up with loan guarantees up to 90%.
The BizBen Index November 2010 report on the sale of small businesses in California, by county, (available at http://www.bizben.com/stats/stats-monthly-nov.php) is as follows:
Alameda: 64, Amador: 3, Butte: 7, Contra Costa: 25, El Dorado: 6, Fresno: 31, Imperial: 1, Kern: 31, Los Angeles: 213, Madera: 1, Merced: 7, Monterey: 15, Napa: 2, Nevada: 4, Orange: 91, Placer: 14, Riverside: 41, Sacramento: 42, San Bernardino: 42, San Diego: 79, San Francisco: 37, San Joaquin: 17, San Luis Obispo: 4, San Mateo: 14, Santa Barbara: 20, Santa Clara: 51, Santa Cruz: 4, Shasta: 8, Solano: 17, Sonoma: 20, Stanislaus: 9, Sutter: 7, Tehama: 1, Tulare: 11, Tuolumne: 2, Ventura: 26, Yolo: 11.
About the Author: Peter Siegel, MBA is the Founder of www.BizBen.com (established 1994 - 7000+ California businesses for sale, 200 new listings daily) and the Director of the BizBen Network (16,000 business buyers, 4,000 small business owners, 1,800 California business brokers & agents). He consults daily with business buyers, business owners, small business advisors, business brokers and agents on selling and buying California small businesses. He is also the author of three books on the topic of how to buy and sell California small to mid-sized companies. For a FREE consultation on the best way to buy or sell a California business, phone Peter Siegel direct at 866-270-6278.