November 16, 2010
BizBuySell.com's survey results reveal that small businesses have yet to feel significant benefits from the Small Business Jobs Act, while lack of available financing continues to hinder business-for-sale transactions.
San Francisco, CA - November 16, 2010 -- BizBuySell.com, the Internet's largest marketplace for buying or selling a small business, today released the results from a survey of the nation's business brokers on the state of the business-for-sale market.
According to surveyed brokers, most agree that the small business market continues to face major hurdles in today's economy, and the government is doing little to educate owners about the benefits of the Small Business Jobs Act. In fact, three in four brokers report that small business owners do not know how governmental initiatives, namely the Small Business Jobs Act, can and will benefit them.
"There is a lack of awareness, but also apathy among small business owners about anything the government says or does, based on recent experiences," explains one broker. Several brokers also noted that more information needs to be made available about the details of the Act: "There is lack of publicity since the Act came into being. The authorities involved should publicize the Act for the benefit of small business owners."
A majority of the brokers surveyed (57%) don't feel the Small Business Jobs Act has succeeded thus far in its goals of supporting Main Street, giving small business owners tax breaks, or better access to credit, among other things.
"Despite recent government initiatives, there is still much to be done to support the small business market and revive business-for-sale transactions," says Mike Handelsman, Group General Manager of BizBuySell.com and BizQuest.com. "We're hearing that business brokers still feel the banks need to relax their lending requirements, regardless of other legislation the government approves."
Some Industries Seeing Renewed Interest from Buyers
Despite a depressed market, certain types of businesses are increasingly popular among buyers in the current climate. Almost half of surveyed business brokers (46%), reported that mainstream service businesses are popular in today's economy. "Some service businesses, such as car washes or medical related businesses, have steady cash flow," explains one broker.
One in four brokers also reported that manufacturing businesses are increasingly popular to buy in the current economy, with one broker noting that "buyers seem to gravitate toward manufacturing, excluding construction related manufacturing."
Restaurants and retail businesses fell at the bottom of the list, being cited by business brokers as the least popular businesses to buy in the current market. "Buyers are still skeptical that consumers are ready to shop, and the media reinforces the crisis at the retail level. 'Everyone' can see the blank spaces in all the strip malls," explains one broker.
Lack of Funding Continuing to Hinder Business Transactions
According to the survey, lack of available financing continues to be the most common factor preventing business transactions from closing, with seller unwillingness to lower their asking price as a secondary issue. Several brokers also noted that buyer confidence seems to be an increasingly large hurdle in closing transactions. "Buyers are more uncertain today about buying a business because of the economy," says one broker. Another notes that "buyer hesitancy and overcompensation during due diligence (treating a $400K deal like a $40 MM deal) are both keeping deals from closing."
Recovery Still Not Likely In the Immediate Term
Consistent with BizBuySell.com's previous broker survey findings in July of 2010, brokers still do not see a full recovery coming in the near future. More than half of the respondents (62%) predict that business transaction volumes won't return to pre-recessionary levels for at least another 18 months.
"It will take some time for buyers and sellers to have confidence in the economy again, but there is pent-up demand for businesses," Handelsman explains. "Once confidence is restored, we will see a steady increase back to pre-recessionary levels."
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
office: (312) 546-4712
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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