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    CSNews Exclusive: 2010 Is Year for Buying, Selling

    Access to small business lending the "missing link" for business transaction increases.

    By Mehgan Belanger

    NEW YORK -- In what could be likened to an alignment of the planets, several factors are coming together to make 2010 an improved year for business owners looking to sell and potential buyers wanting to grow or start a business, according to an expert at BizBuySell.com, an Internet-based business for sale marketplace.

    "We do expect [business transactions] to continue a resurgence for 2010 vs. 2009," Mike Handelsman, general manager of BizBuySell.com, told CSNews Onine. "As capital eases, that will spur the market, but we don't know when that will happen."

    As first reported exclusively by CSNews Online Jan. 20, convenience store transaction activity was mired in the country's economic recession in 2009, but was expected to turn around in 2010. Sales of c-store businesses in 2009 were down 40 percent compared to the previous year, while fourth quarter data showed convenience industry sales climate improved, closing the year with a 20-percent drop in number of transactions closed, according to BizBuySell.com's most recent Insight Report.

    So far in 2010, Handelsman said business transactions are still gaining, partly due to historic factors.

    "January is the strongest month of the year for small business transactions. A lot of people get through the holidays -- a peak season for business -- and then decide it's time to sell, or their New Year's resolution is to exit the business. And it's the same on the buyers' side, they get to the end of the year and become introspective on life and get started on their dream to buy a business," Handelsman told CSNews Online. "I see a resurgence in January vs. the fourth quarter in transactions closed and listings."

    While double-digit unemployment numbers increase demand for small businesses as people look to buy jobs, "the difference from historical cycles is there is little capital available for aspiring small business buyers," he said.

    But potential federal legislation designed to increase small business lending -- if effective -- could be a catalyst for making capital available for deals, Handelsman noted.

    "[Lending] is the missing link to improving the [rate of] small business transactions. Unemployment is high and sellers have been waiting to sell," he explained. "The missing piece is capital availability, and as the government makes it more available, that will spur transactions."

    Other factors pointing to an improved market in 2010 were detailed in BizBuySell.com's most recent Insight Report, and include:

    -- Latent supply coming up for sale.
    -- Unemployed workers seeking jobs.
    -- Easing credit for buyers.
    -- Baby boomer small-business owners looking to retire.

    Handelsman did provide one caveat to the resurgence. "I don't feel there will be a dramatic change in the big picture. It is still a challenging market."

    For those business owners who must complete a deal, Handelsman said there is a changing dynamic in the market that could help -- seller financing.

    "Before late 2008 when the crisis started, small business transactions were funded through banks backed by the Small Business Administration (SBA) program. But because that is less available now, business owners who really want to sell are being forced to offer seller financing to make deals happen," he said, explaining this is when a buyer provides the down payment for the sale, and the seller issues a note to the buyer for the remaining transaction balance, which the buyer will pay directly to the seller over time.

    "For sellers who really want to exit the business in the current environment, they must consider offering seller financing."

    Related News:

    C-store Business Transactions Declined 40 Percent in 2009

    Obama Cites Small Businesses as Economy Cure

    By Mehgan Belanger
    • About Mehgan Belanger

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