Although the 13,329 total of small and mid-sized
California businesses for sale sold last year represents a 6.6% decline from the 14,277 completed deals in 2009, the final quarter of 2010 showed an improvement compared to the same period the prior year. The 3,615 closed escrows last October, November and December exceeded the 3,461 total for the same 2009 period, according to the figures compiled and reported by the BizBen Index.
The turnaround provides a good demonstration of the effort and the resourcefulness of buyers, sellers and their intermediaries determined to complete transactions despite the obstacles. Impediments to completing deals have included the uncertainty in the economy and the difficulty getting loans needed to help fund transactions.
During the later part of last year, we saw more seller financing--both in the number of transactions and in the size of the loans--which helped to overcome the reluctance of financial institutions to lend for business acquisitions. Also troubling buyers and sellers was the decline in gross volume and net earnings experienced by many companies up for sale. With depressed performance hurting business value, most sellers were reluctant to take their companies to market, even if they were motivated to retire. And buyers are understandably averse to paying what a business may have been worth before the economic downturn.
The solution to this dilemma, in some cases, has been the agreement containing an earnout provision. In its simplest form, this strategy calls for the buyer to pay today's value for the business, with the understanding that if and when revenues grow over the next few years, the buyer will be locked into a higher price. The new value would reflect the improvement in business, and would be expressed by an increase in payments to the seller.
Some owners were able to achieve part of their objectives by decided to sell only portions of their companies. This can result in a more manageable deal for a buyer and may include an option for the buyer to take over the rest of the business when he or she has compiled the cash and lending support needed to do so.
The last quarter surge in the state’s sales of businesses helped to reverse the decline in activity during the first nine months of 2010 compared to the same 2009 period. The total for last year was 13,329 sold businesses, a decline of 6.6% from the 14,277 transactions recorded the year before.
Most counties shared the decline in sales activity, including the most populous parts of southern California. For example, there were 3,557 completed deals recorded in Los Angeles for 2010 and 3,769 deals during the prior 12 months. Orange County figures show a decline, year to year, from 1,336 for 2009 to 1,205 last year. Drops in sales also were noted in San Diego County from 1,401 in 2009 to 1,150 in 2010, and in San Bernardino County 713 to 577.
By contrast, some Northern California counties logged more sales last year than in 2009. That includes San Francisco, up to 535 deals in 2010 from 502 transactions completed the prior year, Santa Clara County with 768 transactions in 2010, up from 718 in 2009, and Fresno County, where 393 deals were completed last year, up slightly from 388 in 2009.
The BizBen Index also reported a 5% increase in December 2010 sales to 1,253, compared to the 1,193 transactions recorded during the last month of 2009.
The sales totals for small businesses in California, in December 2010, by county, (available at
http://www.bizben.com/stats/stats-monthly-dec.php) are as follows:
Alameda: 51, Amador: 1, Butte: 6, Contra Costa: 29, El Dorado: 6, Fresno: 44, Humboldt: 3, Imperial: 2, Kern: 31, Lake: 1, Lassen: 3, Los Angeles: 295, Madera: 1, Marin: 3, Mendocino: 1, Merced: 2, Mono: 1, Monterey: 17, Napa: 1, Nevada: 5, Orange: 110, Placer: 12, Riverside: 74, Sacramento: 27, San Bernardino: 52, San Diego: 95, San Francisco: 78, San Joaquin: 18, San Luis Obispo: 13, San Mateo: 19, Santa Barbara: 23, Santa Clara: 83, Santa Cruz: 12, Shasta: 8, Solano: 11, Sonoma: 33, Stanislaus: 16, Sutter: 15, Tehama: 4, Tulare: 13, Tuolumne: 1, Ventura: 31, Yolo: 1, Yuba: 1.
Sales totals by county for 2010 are available at
http://www.bizben.com/stats/stats.php. The totals are:
Alameda: 582, Amador: 16, Butte: 93, Calaveras: 14, Contra Costa: 319, El Dorado: 64, Fresno: 393, Glenn: 3, Humboldt: 16, Imperial: 35, Inyo: 2, Kern: 303, Kings: 4, Lake: 7, Lassen: 9, Los Angeles: 3557, Madera: 8, Marin: 73, Mendocino: 12, Merced: 71, Mono: 3, Monterey: 191, Napa: 72, Nevada: 27, Orange: 1205, Placer: 119, Riverside: 452, Sacramento: 403, San Bernardino: 577, San Diego: 1150, San Francisco: 535, San Joaquin: 229, San Luis Obispo: 124, San Mateo: 242, Santa Barbara: 203, Santa Clara: 768, Santa Cruz: 112, Shasta: 88, Siskiyou: 6, Solano: 108, Sonoma: 270, Stanislaus: 197, Sutter: 57, Tehama: 28, Trinity: 1, Tulare: 180, Tuolumne: 23, Ventura: 300, Yolo: 71, Yuba: 7
About The Author: Peter Siegel, MBA is the Founder & President of BizBen.com and the BizBen Network. The BizBen.com Index has been tracking the sale of California small businesses since 1994. Phone Peter Siegel direct at 866-270-6278 about the BizBen.com Index or if you need assistance with selling or buying California small businesses on BizBen.com.
Posted on January 25, 2011 | 
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