The 1,279 total of business for sale offerings that sold last month exceeds by 11.7% the sum of 1,145 completed deals recorded the same month last year, according to the BizBen.com Index.
Much of the reason for the boost in sales for May can be attributed to delays in completing deals originally planned for April closing but not ready for transfer until the following month. Among the problems were slow approvals of loans needed to fund the transactions. Another factor were the business interruptions of spring break and Easter Holidays.
Additionally, improved May sales figures correspond with the growth in the BizaBen.com Index Survey of Economic Indicators. Those indicators include:
1. Investments: Increased investor confidence that encouraged California business buyers to move forward with their plans also was apparent on the national scale. The Dow Jones Industrial Average broke the $15,000 mark on the New York Exchange for the first time in May and set a new record high. The growth in value of invested wealth meant more money available to California business buyers for use to make down payments and to fund working capital requirements.
2. Financing Availability: While access to borrowed capital for small business purchases remains a challenge, many of the state's banks and other financial institutions are starting to build their loan portfolios. One positive indication is the Small Business Administration's announcement that it has guaranteed more loans so far this fiscal year than at this time in FY 2012. A survey of professionals serving California's business for sale market reveals the expectation that it will take several months--perhaps even a few years--before we experience the rate of loan approvals that were common before the mortgage meltdown and banking crisis.
3. Employment Figures: A sign of improving economic conditions is increased employment, enabling more people to boost their spending for goods and services. The decline in the jobless rate to 7.5%--the lowest in 4-1/2 years--that was announced last month, has encouraged buyers and sellers to move forward with their plans. A continued drop in unemployment in the months ahead may have the opposite effect, with decreased demand for businesses to buy, as Californians find suitable employment and leave the business for sale market.
4. Real Estate: California marked an increase of 1.4% in the rate of home purchases last month, compared to the previous month. This is another signal that the economy is gaining momentum, and boosting the confidence of business buyers to find suitable companies to purchase. With home prices also on the rise, buyers find addition home equity that they can use to strengthen their borrowing ability.
5. Confidence of Buyers and Sellers: Surveys of clients for our consulting services and other buyers and sellers indicate growing confidence in the strength of the economy and the likelihood that it will continue to expand through the balance of this year and into 2014. A healthy economy is usually associated with an increase in business sales. Buyers have more confidence about purchasing small or mid-sized California business. Additionally, many business owners--typically unwilling to change their circumstances when the economic future is uncertain--are more confident about the wisdom of selling in an economy expected to continue expanding.
6. Broker/Intermediary Outlook: While some business brokers and agents are not convinced we are "out of the woods" in terms of the health of the economy, the majority notice growing activity in the state's business for sale market, and expect that trend to continue at least into 2014. BizBen.com Index reports that a total of 6,190 small and mid-market businesses have been sold in California through May of this year. That figure represents a five percent increase over the 5,888 transactions reported in the state during the same 2012 period.
This encouraging news does not change the fact that 80 percent of buyers in the market right now are unlikely to achieve the goal of purchasing a business. Meanwhile, 70 percent to 75 percent of sellers will not be able to find a willing and able buyer ready to close a deal. That means a lot of wasted time and energy on both the buy and sell sides of the market. We endeavor to aid serious and determined individuals in their efforts to buy or to sell, with the ProBuy and ProSell programs provided on this site. A new eBook, "Buying a California Business in the New Economy" has recently been published, offering information, insights and strategies for those who intend to be among the 20 percent of California business buyers who are successful. The eBook "Selling a California Business in the New Economy," will be available shortly.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Lee Petsas, Business Broker - Orange, San Diego Counties, Inland Empire
UBI Business Brokers has been successfully selling businesses in Southern California since 1965. Our Agents have over 100 years of experience in selling small to medium size businesses throughout Southern California. We service Orange County, Inland Empire, San Diego. Phone Lee at 714-363-0440.
|Michael Davidson, Business Broker - Southern California
Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.
|Jeff Back, Broker: Restaurant Specialist - SF Bay Area
J. Back & Associates Restaurant Real Estate was founded in 1988 as the first bay area real estate company to specialize exclusively in restaurant real estate. I am the past President of Charley Browns restaurants and have been involved in the restaurant business for over 35 years. 925-736-8200.
|Michael Floorman, Business Broker, BTI, San Francisco Bay Area
Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.
|Chris Seaman, Business Broker - San Diego County Area
Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.
|Rob Hartman: Business Broker, SF Bay Area
Business brokerage services in the SF Bay Area. I bring skill, integrity and energy to all of my clients and our projects. I'm accustomed to working with a wide variety of clients and their businesses; large or small, simple or highly complex. Get a free consultation by phoning 650-279-3097.
|AJ Rana - Business Broker, San Francisco Bay Area
Professionals who understand the importance of world class business brokerage service and the value it can create. Specializing in assisting sellers and buyers with retail stores, restaurants, hospitality & lodging, manufacturing operations, distribution companies, e-commerce and service businesses.
|Harry Sidhu, CBB, Broker: SF Bay Area, Central Valley, SAC Region
Assisting both sellers and buyers of businesses - dealing mainly with Liquor Stores, Grocery Markets, Gas Stations, Smoke Shops, Restaurant Related, Retail Related, Service Related. Serving SF Bay Area, North Bay, Sacramento area. Call Harry Sidhu, CBB for assistance at 510-366-6130.
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What you will read in this BizBen blog post you will probably not find in any manual or set of instructions provided by the ABC (liquor licenses in California). This blog post by Jeff Back (SF Bay Area Restaurant Broker Specialist) at 925-736-8200 discusses this topic of liquor licenses in detail.
|Tips From A Restaurant Broker - Check A Restaurant For Karma Before You Buy
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