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SELLING OUT
12:00 AM CDT on Thursday, July 24, 2008
To all the usual reasons that small businesses are put up for sale – personal problems and personnel squabbles among them – add economic woes this year. But even as for-sale listings rise around the country, so is buyer interest.
"When economic times get tough and people can't find a job, they will go out and buy a job," said Ronald Hottes, president of the Business Team, a broker in Torrance, Calif.
The problem for owners is that prices appear to be softening.
The nation's largest listing site, biz buysell.com, recently had 50,000 businesses for sale, vs. 43,000 the same time last year, said Michael Handelsman, bizbuysell's general manager.
Brokers say buyers are often retirees looking for a second act, or laid-off executives looking for a business to run.
Retirement, illness, divorce, death – and simple burnout – still drive the majority of owners to sell, but in the rocky economy, some otherwise solid businesses are now having a hard time.
Pinpointing what is happening to sales prices nationwide is difficult because data are diffuse and unreliable.
Most transfers of small businesses are between individuals, who are not required to register such transactions.
But listing sites and brokers around the country say sellers have become more flexible about price.
One reason is that a crucial small business financing tool, home equity lines of credit, has been drying up as house values fall.
"A year ago, people were using home equity loans," Mr. Hottes said. "And now they are drawing down their 401(k)s."
Sellers are providing more financing, said Julie Gordon White, chief executive of BlueKey Business Brokerage in Point Richmond, Calif.
Even so, an unpleasant truth is that many, if not most, businesses don't sell.
The main reason, according to Louis Vescio, owner of Sunbelt Business Brokers in Melbourne, Fla., is that "most small-business owners keep bad records," so buyers cannot get an accurate financial picture.
Confidentiality also hampers sales, brokers say, as owners try to keep employees, customers and competitors in the dark.
The New York Times
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