Small Business Purchases & Sales Spike

      BizBuySell.com, a business transaction listing website, reports an increase in small business purchases & sales. In fact, it states that more are on the market than at any time in the last several years. In addition, the average sales price business owners are getting has risen. Most analysts attribute this in part to Baby Boomers reaching the age where they want to “cash out” and semi-retire. This spike in business sales is also fueled by the rebounding economy over the last couple of years. After the last recession of 2008, many business owners do not want to ride out another downturn. The equity in their businesses is their retirement fund. In New York City particularly, some of the sales are sparked by escalating rents. Many small retail business owners know that when their leases come up for renewal, they may be priced out of their spaces.

     Many of the prospective purchasers of these businesses are minority or women. A 2014 BuyBizSell study showed that of the buyers aged 30 to 49, thirty percent identify as black, Hispanic or Asian. In that same age group, over twenty percent are Women. This is understandable given that buying a business can be cost prohibitive and these groups frequently qualify for grants. The New York Empire State Development Agency administers many programs of this type. These trend are resulting in more a diverse demographic among entrepreneurs and small business owners in New York.

    Despite the availability of these grants, many of these younger buyers still have trouble obtaining adequate financing. Sellers eager to retire fill the gap by privately financing the sales. Many small business purchases & sales involve deferred portions of the purchase price with the Sellers accepting promissory notes in lieu of cash up front.

    Business owners considering selling should start planning at least a year or two in advance. They should be conducting due diligence on their businesses just as a prospective buyer would. This may involve tax planning, investing in new equipment, revisiting shareholder agreements or clearing up any outstanding regulatory or building violations.

     We have handled many small business purchases & sales involving almost every industry. If you are thinking about buying or selling a business, call the Wright Law Firm for a consultation.

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