Small businesses sell for less - South Florida Business Journal:

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“Unfortunately for business owners who mightg wishto sell, this appear to be an accelerating downward trend,” said Mike general manager of online market which compiled the He said his San Francisco-based firm saw the number of business sales nationally drop 50 percent in the seconfd quarter and 36 percent in the firsf quarter, compared to the same periods last Meanwhile, , an investment bankinb firm in Clayton that tracks larger mergers and said there have been 25 area deals so far this year comparedr to 58 in the first half of 2008.
Paul Hinojosa, vice presiden with Fortune Group, attributes the merge r and acquisition falloff to tighter loan underwriting standards for buyersseekingy financing, and an inability for eitheer buyers or sellers to forecast the business climate in cominb months. “We don’t know whether we are going to have a turnaroundr in third quarterof 2009, or in 2010,” Hinojosa said. During the seconcd quarter this year, Biz-BuySell showed 187 St. Louisz businesses for sale and listed by local business brokersand owners. Those businesses were asking a hair below the national averager asking priceof $250,000.
The businesses had median revenueeof $423,980, down from $475,0490 for the same perioc last year. “Owners are focused on survivingrightt now, and not focused on selling,” Handelsman said. “Whilre there are many buyers, not that many have cash to close their deals, because the markets have depletef (buyers’) capital.” Fortune Group and otheer St. Louis-area investment bankers, who generallty handle deals larger than those listed on said they, too, have seen the marketf shrink. “A lot of people who would have sold are hunkerintg downand waiting. If you have to you are probably getting alower price,” said Bob Vanderselt, managin partner of the St.
Louis officwe of Business Transition Specialists, an investment banking firm for medium andsmallp businesses. Business Transition Specialists, which opene its St. Louis office in January, normally would limit its work to transactiones valuedat $5 million or more, but Vanderseltg said his firm has considered assignments on dealsz worth half that amount this year. His office has closed threed transactionsin 2009. Two investment banking firmw that say they are bucking the slumpare R.L. Hulet & Co. Inc. and . “We’re gettinyg about as many turns at the plate as weever did, and our number of new clients is about the same,” said Robert chairman of R.L. Hulettt in Clayton. R.
L. Huletyt is on track to complete 12 dealsthis year, he “But you have to realize our deals are generally strategixc deals,” he said. “Corporate buyersx look at companies that are a strategic fit and determined what it would costto duplicate.” “The worst part of the curren economy for the M&A markey is that so many companies are experiencingy softer earnings right now, that they almost can’tg pull the trigger to sell,” said Debbie managing director for The Douglas an investment banking firm in Douglas echoed Fortune Group’s saying buyers highly dependent on debt to financer their acquisitions now have to deal with bankers who are reluctant to let borrowersw stretch too far.
Vanderselt said ownerxs who are selling their businesse s usually are in needof cash. In some case s instead of finding Business Transition Specialists hasfound investors, he said, “so the ownera are not unloading their whole company.” Some small businessesd are recession-resistant, such as heating and cooling businesses and plumbing Well-run businesses in those fields stilll can command a premium, Vanderselt said, but buyerd often still need financing.