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 banks aren't lending, you have to fall back on other ways of financing if you want to complete a sale.

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.

Counties in the southern portion of the state showed consistent results on the positive side. The increase--when comparing January 2009 sales figures with those of last month--totaled 28% in Los Angeles County, 33% in San Diego County and 20% in Orange County. Going against the trend were some large Northern California counties such as San Francisco, down 15% in deal volume last month vs. January 2009, Alameda County showing a 19% decline and Sacramento ending the month with 18% fewer transactions than the comparable period last year.

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