An improving economy will likely strengthen the businesses for sale in the United States, a survey suggests.
A survey of small business owners by BizBuySell.com, the Internet
marketplace for buying or selling a small business, found 76 percent of
responding brokers nationwide anticipate that 2011 will be a good year
to sell. A generally positive feeling about economic recovery seems to
be the driving factor for the encouraging reports about the
business-for-sale market this year, the report noted.
More than two thirds of the brokers - 69 percent - who anticipate that
this year will be a good year to sell a business cite "the economy in
general is starting to recover" as driving their bullish outlook. Other
top reasons for optimism cited by brokers include "more businesses
coming on the market" and "better financing becoming available for
business buyers".
According to the survey, a lack of available financing is still the
most common factor preventing business transactions from closing, a
trend that is continuing from two previous BizBuySell.com broker
surveys conducted in July and November of 2010. Nearly half of
the brokers surveyed, 48 percent, report financing as the biggest issue
hindering business for sale transactions. Seller unwillingness to
lower their asking price is an additional issue, with 26 percent of the
brokers surveyed reporting it as a primary factor preventing sales from
closing.
"We're hearing that, while the economy certainly isn't back to what it
was, business owners are starting to feel more confident about it, and
they're seeing a reprieve from the recessionary environment we've been
in over the past few years," says Mike Handelsman, group general
manager of BizBuySell.com and BizQuest.com. "Based on our conversations
with business sellers, brokers and buyers, we believe that stable
businesses with appropriate price expectations will likely receive
quality offers from prospective buyers if they come on the market
during the next twelve months."
While the brokers surveyed are feeling confident about the
business-for-sale market in 2011, most respondents still don't believe
business transaction volumes will return to pre-recession levels for at
least 18 months. This is again consistent with BizBuySell.com's
two previous broker survey findings. Of the respondents, 66
percent predict that business transaction volumes won't return to
pre-recessionary levels for at least another 18 months, a slight
increase from the 62 percent of brokers who responded similarly in
November, and 53 percent in July.
The extension of the favorable long-term capital gains tax rate is
having a slight effect on the business-for-sale market in 2011, but
will likely be a driving factor for business owners looking to sell
within the next few years, the report noted. Fifty-four percent of the
brokers surveyed noted that the extension will have little effect on
the market this year, but, as one respondent notes "sellers are unsure
of what the rate will be after 2012, so many are positioning a sale
within the next two years."
Other outlying factors, such as legislative changes, seem to be having
little effect on the business-for-sale market. Sixty-two percent of the
brokers surveyed said that the Small Business Jobs Act has not affected
business owners' desire to sell. "I think many small business owners
are still unaware of the changes and how they can benefit from them,"
explains one survey respondent. "Many of these people are too
busy or burnt out to keep up with the latest information."
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.
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