A majority of California Business Brokers thinks it will be awhile before the slowed rate at which small and mid-sized businesses change hands will return to pre-2008 levels. That's when purchase funds were much easier to borrow and consumer optimism was high. Nearly half of the brokers and agents polled recently in a BizBen.com Poll don't anticipate a full recovery.
That's the conclusion reached by business sales professionals asked in a statewide survey to predict when we can look forward to a level of business sales activity similar to the closed escrow figures posted thru 2007. A large percentage of respondents, 45%, doubt the rate of business transfers will match up to the annual figures--often about 25,000 deals--recorded in many of the years that preceded the mortgage meltdown and economic ailments that followed. The next largest group was 35% of respondents who predicted the business sales activity will recover, but not until the 2012-2013 time frame.
The survey results also show that about 18% of business brokers and agents who were questioned about a recovery in the businesses for sale market are more optimistic, saying we’ll begin to achieve monthly sales levels matching the pre-2008 numbers within a year. The remainder, about 5%, believe that recovery has already taken place.
The count of businesses sold last year totaled 13,329, a decline from the 14,277 deals recorded in 2009, according to the BizBen Index, which has been tracking and reporting business sales statistics in California for a number of years. The Index reported 21,689 completed transactions in 2008, the year associated with the mortgage crisis. Some 26,238 businesses had been sold the previous year.
Among the observations of business sales intermediaries we spoke with was an often- repeated belief that many potential buyers as well as sellers took a ”wait and see” attitude rather than moving forward with their plans. Some of the buyers actively engaged in looking for purchase candidates abandoned the search when it became apparent that business revenues were declining. And a number of owners of small and mid-sized businesses who were readying their companies for sale decided to put their plans on hold. Their fears were that the prices they could get for their businesses were dropping along with revenues and profits.
"Any time you see a fall off in sales of 50% in just three years, you know it’s time to take a second look at the business," was the comment of one Southern California broker who was asked about this. He referred to the difference in the number of business sales recorded in California last year vs. the 2007 total.
Another of the business brokers noted that "Maybe it’s just a matter of a correction in the market. I’m sure we’re going to see sales volume come back up. The underlying forces are there. The demand is building for buyers and sellers. But it will take a while."
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). BizBen.com offers business buyers free online webinars/educational events, and phone consultations on the best way to find and buy a California small to mid-sized business. Peter Siegel can be reached direct at 866-270-6278.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|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.
|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.
|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.
|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.
|Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|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.
|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.
|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.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Financing A Business Purchase With Limited Or No Real Estate Collateral
In my experience working with the "right banks and financial institutions" repayment ability sometimes overrules collateral pledged by someone needing financing for a business purchase or a down payment. Peter Siegel, MBA (Business Purchase Financing Expert) at 866-270-6278 shares his experience.
|How Many Months Should I List My Business With A Business Broker?
It's important to remember that selling a business takes time. Unlike selling a house, which can be sold relatively fast, a business can take up to six months to a year to sell. Joe Ranieri (Orange County Business Broker) at 714-292-5448 explores this topic from a Business Brokers perspective.
|What Should I Do If Other Buyers Are Trying To Buy The Same Business As Me?
Buying a small business is hard enough when there is no competition, so how might a buyer navigate the process when there is additional competition from other buyers? Potential small business buyers are offered a few key ways that a buyer can beat out other potential business buyers in this article.
|How Do I Navigate Through The Negotiation Process When Buying A Business?
Negotiating the terms of a business deal is a delicate process, where one wrong move can cost you the business that you wanted to purchase. Peter Siegel, MBA (BizBen ProBuy Program) discusses the ins and outs of negotiations, and how to work well with the seller to get a deal done.
|Before Buying A California Business, 10 Questions You Should Ask Yourself
Before buying a business, all serious business buyers should ask themselves some key questions about possible buying a small California business, franchise, or opportunity - from Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program Advisor with BizBen) at 866-270-6278.
|Why Deals Fall Out: Unrealistic High Asking Prices Are Usually The Reason
The unfortunate truth is that approximately 50% of all small business sales transactions fall out. While failed transactions can happen for a many reasons, Peter Siegel, MBA (BizBen Director & Business Purchase Financing Expert) discusses the main reason deals fall through; steep asking prices.
|How Many Listings Is Too Many For One Broker To Handle? Is It 5? 10? 20?
Peter Siegel, MBA in this Vlog/Podcast discusses how many listings is too many for one business broker to handle at one time. Is it 5 is it 20? I recently had a coaching call with one of my BizBen broker clients who asked that question this week. There are many factors that go into the answer.
|Unreported Income: Should Sellers Disclose Unreported Cash To Buyers?
Should owners who offer a business for sale reveal to prospective buyers any income that is not recorded in the books? This is a controversial topic with arguments both for and against. Most business sales intermediaries believe if you don't pay tax on it, you can't claim it. Some sellers disagree.
|See All News, Tips And Events|