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Sales of Small Business Companies Increase in 2011 Franchise Stats Lacking

This article in the Wall Street Journal by Sarah E. Needleman reveals that the sale of small businesses continued to increase for the 2nd year in a row. Unfortunately, I haven't seen any data pertaining to the sale of franchises.

The small-business-for-sale marketplace picked up again last year, for the second year in a row, thanks in part to better business performance. Sales of businesses with roughly $360,000 in annual revenue rose 3.3% in 2011, according to BizBuySell.com, a San Francisco-based online marketplace for small-business acquisitions. The median revenue for small businesses sold last year rose by 6.7%, its data show.

 Seller financing has been a way to deal with tight credit markets.

 Sellers are still being "a little bit conservative with their sale price to get things done," says Curtis Kroeker, a BizBuySell general manager. Slight improvements in small business lending conditions could be one factor helping to boost transactions, Mr. Kroeker says. But many sellers are continuing to help finance deals for buyers who are unable to secure sufficient funding otherwise, he adds."Everyone's seeing growth in revenue," says Tom Gottlieb, managing partner at VR Mergers & Acquisitions LLC, an Austin, Texas brokerage. But he believes that "banks are holding things back from really going well," adding that "even when the banks are involved, you have to do seller financing in many cases."

The percent of sales that included seller financing is way up!

In healthy economies, seller financing typically accounts for about 20% to 30% of a small-business sale, says Joseph L. Caffrey, president and CEO of Worldwide Business Brokers LLC, a brokerage based in Virginia Beach, Va., with locations throughout the East Coast. But in recent years and still today, sellers are finding that they need to put up as much as 50% to 70%

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About Ed Teixeira

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Ed Teixeira is the founder and owner of FranchiseKnowHow, which publishes articles and provides advice for prospective and existing franchisees and franchisors. He is also COO of  FranchiseGrade.com. Ed's most recent book is The Franchise Buyers Manual, a comprehensive guide for prospective franchisees. He has also published the Home Care Franchise Industry Update for the past 3 years. Ed has worked in the franchise industry for over thirty five years. He was a franchisee and has served as a corporate executive for firms in the retail, manufacturing, healthcare and technology industries. Over the course of his career Ed has been involved with over 1,000 franchise locations and has transacted international licensing in Europe, Asia and South America. His articles and interviews have appeared in numerous publications and media. Ed has spoken before various groups including: the International Franchise Association, the International Franchise Expo, European Healthcare Conference in Luxumbourg and the Chinese Franchise Association in Shanghai, China. He has participated in the CEO Magazine Roundtable Meetings with business leaders from around the country. 

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