Results from a survey conducted by BizBuySell.com suggest that 2011 may be the time to sell for small business owners.
San Francisco, CA -- BizBuySell.com, the Internet's largest marketplace for buying or selling a small business, today released the results from a recent survey of the nation's business brokers on the state of the business-for-sale market.
Of the brokers surveyed, 73% said that the number of buyers interested in purchasing a business is increasing, while about half - 54% - said the number of owners looking to sell is increasing. "There are more buyers than sellers. Wealthy buyers are stepping up to buy businesses instead of stocks. This is a seller's market," said one surveyed broker. Additionally, about 66% of brokers said market conditions will improve over the remainder of 2011, and 51% said they expect to see even more transactions in 2012.
"These numbers suggest that there is currently more demand for businesses to buy than supply of businesses to sell," explained Mike Handelsman, Group General Manager of BizBuySell.com and BizQuest.com. "This, plus the fact that the market will likely improve over the course of the year and into next year, means that business owners looking to sell should think about doing so now."
Business Owners Still Shy about Selling and Banks Still Shy about Lending, but Situation is Improving
Despite the improving market and increase in owners looking to sell, many of the brokers surveyed - 41% - report that the small business environment continues to be challenging, and is the number one factor in preventing business transactions from closing. "People are scared to trade what they know for what they are not sure of, even if they hate what they have," one broker said. Another broker noted that "the economy may be a bit better, but there is still a lot of fear about the future, and that makes decision-making difficult. The 'do-nothing' decision seems easiest."
Another obstacle mentioned by many business brokers is financing, with 30% of surveyed brokers reporting that lack of financing is the main factor preventing deals from closing. One broker noted that "banks are still stringent with their money," while another is seeing "lack of down payment money for buyers to make purchases." However, this number has improved from the 48% of brokers who voiced similar concerns about transaction financing in February of this year.
"The decrease in the number of brokers reporting financing as the number one issue preventing deals from closing suggests that financing is starting to open up. However, what's more likely is that buyers and sellers are getting more creative with down payment amounts and seller financing to get deals done," Handelsman said.
Full Economic Recovery Still Slow in Coming
Consistent with the past three BizBuySell broker surveys, the majority of business brokers nationwide do not feel confident that business transaction volumes will return to pre-recession levels in the near future. 55% of the brokers surveyed think it will take more than two years for transaction volume to return to pre-recession levels, while another 27% estimate it will take 18-24 months. "Most businesses I talk to had sales drop 40-50% during the recession," one broker said. "They have recovered over half of their losses, but not fully."
"The economy certainly continues to be challenging, but I think the biggest takeaway for business owners looking to sell is that if you have a solid business, now is likely a good time to plan to exit," Handelsman noted. "I'd echo one of the surveyed brokers when he said 'good businesses that are profitable will always have value and will always sell.'"
Full survey results are available to interested members of the media. Local business brokers can be provided as story sources upon request.
Walker Sands Communications
BizBuySell is the Internet's largest business for sale marketplace. Since 1996, BizBuySell has offered tools that make it easy for business owners and brokers to sell a business, and potential buyers to find the business of their dreams. BizBuySell currently has an inventory of approximately 48,000 businesses - spanning 80 countries - for sale at any one time and receives more than 1 million monthly visits. The site also features an extensive franchise directory as well as an easy-to-use business valuation tool. Please visit www.bizbuysell.com for more information.
BizBuySell was founded in 1996 and in 2012 became a division of CoStar Group, Inc. (NASDAQ - CSGP) - commercial real estate's leading provider of information and analytic services. CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information and offers a suite of online services enabling clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. For more information, visit www.costar.com.