Archive for May, 2010

Is There an Economic Upturn?

Sunday, May 16th, 2010

There is no doubt that a major topic of discussion (and concern) today for most of us is the economy. One of the main issues regarding a market where unemployment nears ten (10) percent (or 20% for those who include workers who no longer submit claims or are simply working on a part-time basis, or simply gave up), is whether the recession and/or the recovery is underway. Based on two continuous GDP growth quarters, most economists would indicate that the recession is over-and has been since July 2009. Of course, many would argue that recovery without job creation is nothing but number crunching. In all of that confusion, I wanted to clarify what has been happening in the Business Brokerage world (in Florida) since July 2009.

In a recent article written in the South Florida Business Journal, they indicate that “there are signs of life in the field of buying and selling businesses.” They go on to say that “fourth quarter (2009) figures for South Florida show a rebound in sales prices, prices paid as a multiple of cash flow and the number of businesses sold.” What makes this statement a lot more encouraging is that typically the fourth quarter is the lowest quarter of the year. Here are some other Transworld data which further show a positive trend:

1. Second half 2009 sales transactions increased 32% over first half of 2009.
2. Fourth quarter of 2009 was the second best fourth quarter ever!
3. 2002 is the last time where we showed growth in three consecutive quarters.
4. The Q2 to Q4 positive trend was the second biggest jump in sales at Transworld over two quarters.

Given the aforementioned, many in our business would show cautious optimism for an economic recovery filled with opportunities for those looking to buy and sell a business. Andrew Cagnetta, Transworld President, mentioned in the South Florida article that “anybody who wants to start a business or relocate a business is going to find it pretty easy to find a location and get a good deal.” So, don’t waste any time, take advantage of the turnaround and call us to help you with your business transaction.

The author of this article, Fernando Simo, is a Business Broker in Orlando, Florida, where he helps individuals sell their business, buy a new business, get into a franchise system or with Mergers and Acquisitions. For more information, please visit his webpage at http://www.bizbuyorsellflorida.com, send him an email at fsimo@tworld.com or call him at 407-361-8886.

Posted in Misc | 1 Comment »

Why Sellers Sell Their Business

Sunday, May 16th, 2010

Recently, I was having a meeting with one of my networking colleagues. During our conversation, she pointed out how leery she was of businesses for sale. When I asked why, she indicated that if the seller wants to sell the business it must be because it is not doing well. I found her response interesting and immediately indicated to her that that is most often NOT TRUE.   Sellers sell for a variety of reasons, most of which are not related to poor performance, cash flow or profitability issues. Here are ten (10) other reasons:

1. Health. The seller may no longer be capable of running the business because of health restrictions.
2. Retirement. The seller wants to enjoy his/her golden years.
3. Relocation. Wants to go back to or move to a preferred location.
4. Family. Wants to be closed and/or misses family members.
5. Job. The seller’s significant other gets an opportunity somewhere else or the seller found a job which generates more cash flow than the business.
6. Profitability. The seller wants to cash-in on his investment. This may be a planned or unplanned exit strategy.
7. Business Demands. The business demands may be too much to bear-restricting the seller’s personal enjoyment and relaxation.
8. Other Business Interests. Other opportunities may be more profitable than the existing business.
9. Taxes. It may be to the seller’s benefit to sell the business for tax purposes.
10. Cash flow Requirements. The seller does not have the equity required to grow the business and cannot get financing.

So, if you are thinking about buying a business, from my perspective, it is really not that important to find out why the business is selling. What is important is to select the right kind of business for you. Once you find it, conduct the right level of due diligence to ensure that what you bought is exactly what you are going to get.

The author of this article, Fernando Simo, is a Business Broker in Orlando, Florida, where he helps individuals sell their business, buy a new business, get into a franchise system or with Mergers and Acquisitions. For more information, please visit his webpage at http://www.bizbuyorsellflorida.com, send him an email at fsimo@tworld.com or call him at 407-361-8886.

Posted in Buying, Selling | No Comments »