A Division of New Hampshire Business Sales, Inc.

Business-for-Sale Market Shows Improvement

A recent (July 8th) Blog in the New York Times by Barbara Taylor, who writes the You’re the Boss blog for them, analyzes the changes and improvement we are seeing in business sales activity. Check it out at http://boss.blogs.nytimes.com/2011/07/08/business-for-sale-market-shows-improvement/?ref=smallbusiness

She based her article on the latest report of transactions by quarter by the BizBuySell.com web site. They have reported that “The number of closed transactions reported in Q2 2011 is the most BizBuySell.com has seen since Q4 of 2008”. http://www.bizbuysell.com/news/article076.html?utm_source=bizbuysell&utm_medium=bbs_email&utm_campaign=brokerb070611

Mike Handlesman, Group General Manager, BizBuySell.com and BizQuest.com attributed the uptick to business owners who were finally emerging from survival mode and returning to profitability. An industry breakdown of the 1,198 small businesses sold during the second quarter showed that almost half were in the service sector, while 26 percent were in retail, 18 percent were restaurants and 5 percent were in manufacturing.

To quote Barbara “If you own a Main Street business — which I’ll define here as an owner-operated business with less than $2 million in annual gross revenue — things are still a bit hit and miss. If your business has performed well throughout the economic downturn (“flat is the new growth”) and is in a stable industry, there’s no reason not to take your business to market. Good businesses sell in any economy, and there are plenty of worthy buyers out there who have been looking hard for businesses to buy.”

We have seen a real uptick in our business sales in New Hampshire in the last quarter of 2010 and first quarter of 2011, then had a slowdown when fuel prices started to increase dramatically and the news media started highlighting the dangers of the country going bankrupt after August 2nd. That slowed down activity in the second quarter of 2011, but we have recently seen a real uptick in inquiries about businesses we have for sale, and since the middle of June customer inquiries and seller inquiries about selling seem to be increasing considerably.

As Barbara reports “Personally, my favorite economic indicator is the phone in my office, which has indeed started ringing more often with business owners calling to begin the process of a sale or exit. Many business owners have been asking me if now is a good time to sell, a question that I try to answer with as much candor as possible”. Our experience has been similar to hers recently.

Fortunately we are still seeing the best interest rates ever on business acquisition loans, and banks are competing for the opportunity to make those loans. The availability of financing is still based on the quality of the application, and bankers are being more careful than they were a few years ago, and frankly that is a good thing.

The combination of business owners accepting valuations that are realistic, bankers ready to make loans, and the improving underlying factors in the economy make this a really good time to buy a business.