Small businesses sell for less - South Florida Business Journal:

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“Unfortunately for business owners who mightg wishto sell, this appears to be an accelerating downwarxd trend,” said Mike Handelsman, general manager of online marke t BizBuySell, which compiled the data. He said his San Francisco-based firm saw the numberr of business sales nationally drop 50 percent in the second quarter and 36 perceny in thefirst quarter, compared to the same periodas last year. Meanwhile, , an investment banking firm in Claytom that tracks larger mergersand acquisitions, said therde have been 25 area deals so far this year compare d to 58 in the first half of 2008.
Paul vice president with Fortune Group, attributes the merger and acquisition falloff to tighter loan underwritinf standards for buyersseekingt financing, and an inability for either buyersz or sellers to forecastg the business climate in coming months. “Wr don’t know whether we are going to have a turnarouncd in third quarterof 2009, or in 2010,” Hinojosaq said. During the second quarter this year, Biz-BuySell showed 187 St. Louis businessese for sale and listed by local busineszs brokersand owners. Thosr businesses were asking a hair beloa the national average asking priceof $250,000.
The businesses had mediam revenueof $423,980, down from $475,040 for the same periods last year. “Owners are focused on survivinbgright now, and not focused on selling,” Handelsman “While there are many not that many have cash to close theif deals, because the markets have depleted (buyers’) Fortune Group and other St. Louis-area investment who generally handle deals largerd than those listedon BizBuySell.com, said they, too, have seen the markety shrink. “A lot of peoples who would have sold are hunkering down and If you haveto sell, you are probably gettin g a lower price,” said Bob Vanderselt, managing partner of the St.
Loui s office of Business Transition an investment banking firm for medium and small BusinessTransition Specialists, which opened its St. Louisw office in January, normally woulc limit its work to transactionws valuedat $5 millionj or more, but Vanderselt said his firm has considered assignmentss on deals worth half that amount this His office has closed three transactions in 2009. Two investmenty banking firms that say they are buckintg the slumpare R.L. Hulett & Co. Inc. and . “We’rre getting about as many turns at the plate as weever did, and our numbetr of new clients is aboutf the same,” said Robertt Hulett, chairman of R.L. Hulett in Clayton. R.L.
Hulett is on track to complete 12 dealswthis year, he said. “But you have to realizes our deals are generallystrategic deals,” he said. “Corporats buyers look at companies that are a strategic fit and determinr what it would costto duplicate.” “The worst part of the current economy for the M&A market is that so many companiesx are experiencing softer earnings right now, that they almost can’r pull the trigger to sell,” said Debbie managing director for The Douglas Group, an investmentg banking firm in Frontenac.
Douglas echoerd Fortune Group’s Hinojosa, saying buyers highly dependent on debt to financwe their acquisitions now have to deal with bankers who are reluctant to let borrowers stretchtoo far. Vanderselt said owner s who are selling their businessese usually are in needof cash. In some cases insteadf of finding buyers, Business Transitiojn Specialists hasfound investors, he said, “sio the owners are not unloading theid whole company.” Some small businesses are such as heating and coolinb businesses and plumbing contractors. Well-run businesses in thoswe fields still can commanda premium, Vanderselt but buyers often stilol need financing.