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Sales of Small California Businesses Declined In 2010, Final Quarter Was Up

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 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 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 and the BizBen Network. The Index has been tracking the sale of California small businesses since 1994. Phone Peter Siegel direct at 866-270-6278 about the Index or if you need assistance with selling or buying California small businesses on

Categories: Business For Sale Statistics, Selling A Business

  Helpful Resources To Assist In Selling And Buying California Businesses
Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers

I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.

Joe Sandbank, Esq. - Legal Services

I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Elizabeth McGovern: Escrow Services - SF Bay Area

McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.

Brad Steinberg, Broker - Laundromat Specialists

PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

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