Small Business Sales Rate Grows In California During January
Twenty-four percent more small business sales were recorded in California last month compared to the first month of 2009. We reported this information for the industry and consider the statistic an encouraging sign of recovery from last year's slow market.
Bizben.com statistics show that 1, 074 medium-sized and small businesses changed hands last month while there were 865 transactions in January of last year.
That's the first time since 2007 that the January figure has exceeded the number for the same month in the prior year.
We're taking this as a positive sign of improvement in the market and it's a result of pent-up demand.
Brokers are telling us that their clients on both sides of small business sales have been waiting out the uncertainty in the economy, but now are becoming more eager to do business.
For sellers, it's hard to predict when their companies will recover from the recession, so they can show more profit and collect a better price from a sale.
Buyers understand the problems faced by anyone trying to get a purchase money loan, and they are sensitive to the mood of uncertainty in much of the economy. But to keep waiting can mean watching your living expenses eating away at the fund needed for investment, and getting impatient to become involved in a company so you can start generating an income.
It's obvious that California entrepreneurs are very resourceful when it comes to solving business problems.
We've seen a growing trend for sellers to help fund their deals. Carrying back part of the purchase price secured by the business is not the typical seller's preferred way to construct a transaction. But when you can't rely on business lenders to help you achieve a sale, it's time to employ other funding strategies.
Other strategies employed to complete business sales when there is insufficient lender support include transfer of just part of the company, assumption of seller's debt by the buyer, and having the buyer take possession of the inventory on consignment, paying the seller for items as they are sold at the retail level.
Meanwhile, we're watching what happens with President Obama's recent promise to use about $30 billion in TARP (Troubled Assets Relief Program) money to provide funds for small businesses through their local lenders.
That might help to provide for businesses on Main Street, some of the cash that so far has been available only to Wall Street firms.
The growth in January small business sales was stronger in the southern part of the state, with Los Angeles County recording a 28% increase from January 2009 to last month, San Diego County posting a 33% increase and businesspeople in Orange County closing 20% more transactions. Going against the trend were some large Northern California counties such as San Francisco, down 15% in deal volume last month vs. January 2009, Sacramento County showing a decline of 18% and Alameda County logging a 19% drop in transactions.
BizBen.com has been matching buyers and sellers and connecting them with needed services, such as business brokers, accounting and due diligence professionals, business valuation experts and attorneys since 1994, and has reported business sales statistics for the past 12 years. Additionally, the site provides valuable tips and information and a blog page to benefit participants in the business sales industry.
The by-county sales of small and mid-sized California businesses during January are as follows:
Alameda: 58, Butte: 8, Contra Costa: 27, El Dorado: 9, Fresno: 40, Glenn: 1, Humboldt: 1, Imperial: 4, Inyo: 1, Kern: 20, Kings: 1, Los Angeles: 292, Madera: 1, Marin: 11, Mendocino: 2, Merced: 8, Monterey: 15, Napa: 9, Nevada: 5, Orange: 96, Placer: 14, Riverside: 25, Sacramento: 27, San Bernardino: 38, San Diego: 68, San Francisco: 34, San Joaquin: 30, San Luis Obispo: 15, San Mateo: 17, Santa Barbara: 12, Santa Clara: 83, Santa Cruz: 11, Shasta: 4, Solano: 9, Sonoma: 11, Stanislaus: 24, Sutter: 3, Tehama: 1, Tulare: 14, Tuolumne: 3, Ventura: 16, Yolo: 6
About the Author: Peter Siegel, MBA, is founder and CEO of BizBen.com--businesses for sale in California, a vital resource for anyone who needs assistance with small
business sales or purchases. Find opportunities at =>BizBen.com
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