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Market to sell small business improves

August 26, 2012 8:47 AM By JAMIE HERZLICH jherzlich@aol.com

Photo credit: iStock | If you’re thinking of selling your business, now may be a good time, experts say. The market locally appears to be showing signs of improvement, with increased activity and higher median sale prices.

If you're thinking of selling your business, now may be a good time.

The market locally appears to be showing signs of improvement, with increased activity and higher median sale prices, according to experts.

"There are plenty of buyers that have money," said Ken Stein, president of Kensington Co. & Affiliates in Roslyn Heights, which specializes in mergers and acquisitions.

Business sales are up about 30 percent this year from last at Stein's firm, he estimated.

"Good businesses that are priced competitively are selling quickly," he said, adding he's also seeing slightly higher selling prices.

The median sale price for the New York metro area, which includes Long Island, for this year's second quarter was $237,000, compared with $175,000 a year earlier, according to BizBuySell.com, an online business-for-sale marketplace. Long Island-only data was unavailable.

Recovery: "The numbers would suggest we're seeing a recovery," said Mike Handelsman, group general manager for San Francisco-based BizBuySell.com and BizQuest.com.

Businesses sold in the metro area had a median revenue of $500,000 and a median cash flow of $118,000 versus a median revenue of $400,000 and a median cash flow of $100,000 a year earlier, according to BizBuySell.
Improvements in revenue and cash flow may be the result of businesses' operating leaner and making better decisions in terms of cutting costs and operating more efficiently since the downturn.

"They've come out of this realizing they could do more with less," said George Hubner, president of Landmark Business Ventures, a Hauppauge-based mergers-and-acquisitions adviser.

He's also seen increased activity and closings year over year, and estimates sales prices are probably up 10 percent from last year on his own deals, which are generally larger businesses with revenue of $1 million or more.
Many deals still require some seller financing -- meaning the seller will take partial payment up front and then hold a note on the business for a specified period, Hubner said.

Competitive pricing: "Lending has eased up a little bit," Stein said, noting businesses priced aggressively have been selling in anywhere from 30 days to 120 days on average.

It took Kevin Kimchy, former owner of Performance Printing & Graphics in Massapequa, only about a month to strike a deal with Sir Speedy, which bought Kimchy's business in May.

"It went really quick," Kimchy said, noting he had previously received letters from Sir Speedy asking if he'd like to sell. After experiencing declining sales last year with some of Performance's clients going out of business, Kimchy figured it was a good time to sell.

"I felt they were the right fit," said Kimchy, who now works as a production manager for Sir Speedy in Westbury.
Sir Speedy is larger and could offer Kimchy's clients expanded services, said Evan Bloom, co-owner of Sir Speedy in Westbury, Hauppauge and Melville, which made two acquisitions this year.

"We're always looking," said Bloom, who kept on the owners of both firms.

Having a transition plan can be helpful when selling. Also, clearing up any lingering obstacles or challenges is key, said Stein.

"Deal with any challenges before the sale," he said, noting buyers are still cautious.

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From Newsday.com - http://www.newsday.com/columnists/jamie-herzlich/market-to-sell-small-business-improves-1.3916776?p=