Many owners had hoped to get pre recession prices, but lowered them after finding few takers. But don't worry about sellers. They're still doing fine, according to Kroeker. The average selling price for a small business is up 3.4 percent from a year ago, and more people have the financial ability to buy a company since the recession.
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The easing of the credit crunch is spurring sales. Banks are more willing to lend to small businesses, says Paul Merski, chief economist with the Independent Community Bankers of America, a trade group. Still, some caution remains because of increased government regulation following the financial crisis of 2008. Many sellers are financing sales letting buyers pay on an installment plan to get deals done.
Behind the trend: Baby boomers want to retire, businesses are Nike Jogger Suit
for a company for three years.
could be a year of extreme growth, given the trend we've seen this year," Kroeker says.
NEW YORK Sales of small businesses are finally making big gains.
Before Michael Epstein and his business partner could sell their 13 year old video game manufacturer, eDimensional, they had to agree to finance part of the sale price. Only then did the buyer's lender approve the deal. The deal closed in July. They had hoped to sell five years ago.
Jeremy Bragg and Regi Ott had their eye on River City Coffee, a cafe in Little Rock, Ark., for several years. Nike Womens Coat Bragg managed the cafe, and when the owner decided it was time to sell, he and Ott borrowed from their families for a down payment of about 14 percent of the $70,000 purchase price. The owner financed the rest. The deal was sealed last month.
"We were aggressively trying to sell before the credit crunch, and took it off the market when we weren't feeling good about the buyers and types of financing available," says Epstein, whose company was located in Jupiter, Fla.
Fred Barkman, who last year bought Spectra Laboratories, a company that tests land and water for toxins, is in the process of purchasing a second environmental lab. Both companies were owned by retirees who wanted to sell but had to wait for the economy to improve after the recession devastated the small business market.
"I wasn't expecting this second acquisition. It probably came sooner than I expected," says Barkman, whose company is located in Tacoma, Wash. "But I'm more able to find things worth buying."
healthier following the recession and buyers are finding it's easier to finance deals. At the low point of the recession the second quarter of 2009 BizBuySell logged just 1,040 closings. In the third quarter of this year 1,685 sales closed.
Lyon's purchase was a classic scenario in today's market. He bought from a retiring baby boomer. Lyons put down 60 percent of the $840,000 selling price and the owner lent him the rest.
Small business sales finally make big gains
Richard Lyon bought Bend Commercial Glass in July after looking Nike Coat Kids
"Everyone's sales were 60 percent of what they had been two years before. No one wanted to sell at a low price," says Lyon, whose company is in Bend, Ore.
The economic recovery has created a surge in sales of small businesses.
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