David Hendricks: Psst — Want to sell your business?
Dreams are made or broken when businesses are sold.
In San Antonio, the dreaming is good. The market is healthy enough that businesses can ask for higher prices than the national average, a national broker service says. Asking prices are one thing, though. Selling prices are another.
The median asking price for San Antonio businesses now for sale is $299,000, nearly $50,000 more than the national average, according to the Internet site BizBuySell.com.
The number is derived from 157 San Antonio-area businesses listed on the 10-year-old online site, which is operated by a San Francisco-based commercial real estate firm, LoopNet Inc.
BizBuySell.com lists about 38,000 U.S. businesses up for sale. The listings are purchased from business brokers and business owners selling their companies without a broker.
Listed San Antonio companies average $470,000 in annual revenue, along with $99,016 in average pretax net income.
The San Antonio asking prices usually are close to multiples of 1.07 times revenues or 3.94 times net income, according to BizBuySell.com.
The actual sales price, though, is different, said John Dini, owner of a San Antonio business brokerage, MPN Inc.
San Antonio companies typically sell for 2.5 times net income, Dini said.
"A company with $470,000 in annual revenue is not a big company," Dini pointed out. "That is a company of not more than 10 employees. The numbers reflect that San Antonio is very much a small-business town. We don't have a lot midmarket companies." Midmarket companies start at more than $3 million in sales price.
"San Antonio is a Main Street market," Dini explained. "A business owner making a living at it will sell to someone else who will make a living at it."
Businesses on the block usually sell in the six- to 12-month time frame, said Mike Handelsman, general manger at BizBuySell.com.
"That's reasonable in San Antonio for a healthy company," Dini said.
"In terms of activity, we are seeing an increasing number of businesses for sale in the (San Antonio) area," Handelsman said.
"As many baby boomers who own businesses move closer to retirement, we should see an increasing number of businesses for sale. That will likely put some downward pressure on pricing," he said.
It may, but the values of businesses are not always reliant purely on supply and demand. The regional business climate and the number of competitors also factor into sales prices.
San Antonio's economy definitely displays a healthy growth rate. The city's economy grew at a 2.71 percent annual average rate from 2002 to 2006. Among large Texas cities, only Austin's economy expanded faster, according to the U.S. Bureau of Economic Analysis.
Although residential real estate construction is waning in San Antonio, commercial and industrial real estate construction thrives on both current projects and those that have not broken ground yet.
That promises a solid foundation for job growth in San Antonio's future. In turn, business owners possess a better chance to cash in on their dreams when it comes time to sell their companies.
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 businesses - spanning 80 countries - for sale at any one time and receives more than 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.
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