More Small Businesses Sold in 2010, But for Less

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NEW YORK (MainStreet) — More small business owners were able to sell their establishments in 2010, but not for the price they had in mind.

The number of U.S. businesses sold to new owners, as reported by business brokers, rose by 3% last year, according to data from online marketplace BizBuySell.com. However, the median closed-transaction sale price also dropped 6.3% year over year from $160,000 in 2009 to $150,000 in 2010.

"In 2010, we saw more deals getting done,” Mike Handelsman, group general manager for BizBuySell.com, said in a press release. “One of the key drivers for that growth was that business sellers were more realistic about their business valuations."

However, it wasn’t just decreased expectations that caused owners to sell their businesses for less. Stricter lending practices and constrained access to capital reduced the number of qualified buyers, forcing owners to accept bids that weren’t in their original price range.

"While access to financing for business acquisitions began to loosen up in the second half of 2010, it remains difficult for many business buyers to get the financing necessary to purchase a company," Handelsman said.

BizBuySell.com receives closed sale data from business brokers around the country. The data included in the report are based on transactions made on its online marketplace last year. In all, 4,568 businesses were sold in 2010. There are currently 45,000 businesses for sale nationwide on the website.

The company said the overall increase was spurred by strong sales in the fourth quarter, where total transactions were up 11% compared to 2009. The spike is attributed partially to Congress’s delayed extension of the Bush tax cuts. With the lower capital gains tax rates potentially expiring at the end of the year, many sellers looked to close deals when after-tax proceeds would be maximized, said BizBuySell.

However, BizBuySell said more significant sales growth could be on the horizon. The company expects the number of businesses listed for sale to increase in 2011 as baby boomers hit retirement and look to unload their businesses.

Additionally, business brokers nationwide report a growing number of buyers looking to purchase a company, thanks to more affordable prices and the nation's high unemployment, which convinced many laid-off employees to try entrepreneurship.

Ultimately, these results will hinge on how much credit potential business owners can get in 2011.

"When credit is more readily available, the wheels of business succession will start to turn again,” Handelsman said.”Until then, we can expect a moderate recovery in the business for sale marketplace."

Want to get into business? MainStreet  breaks down how to get a small business bank loan and bank loan alternatives.

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