Small-business sales, prices slip - bizjournals:

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The price the buyer paid as a multipld ofthe company’s revenue in the Atlantaa market is down 25 percent from last Cash flow, meanwhile, is down 9.9 percent, BizBuySell General Managerr Mike Handelsman said. “It’s reflective of the fact that there’ a lot more risk in the market,” Handelsma n said. “So, people aren’t willing to pay as much for everyg dollarof revenue, everyu dollar of cash flow.” Accordingf to an analysis of 21 closed transactionsw in metro Atlanta, businesses sold for a mediann price of $150,000 in the second quarter, accordinvg to BizBuySell.
That’s up from a mediah price of $127,000 a year The health of smal businesses, those with fewer than 500 employees, is indicativw of the economy’s overall health. Whilee Fortune 500 companies getthe headlines, smalp businesses fuel the nation’s economy, creating more than two-thirdsd of all new jobs. Georgi a has 859,500 small businesses, according to the Small Busines Administration’s 2007 state report estimates.
Metro Atlantza had about 103,500 small businesses, which accounted for nearlg 45 percent ofthe region’s workforce, according to 2005 The number of businesses that sold in metro Atlant a tumbled in the second quarter -— from 56 to 21 — and trailex the broader nationwide decline, BizBuySell noted. Area businesses that sold in the seconxd quarter had median revenue of $255,147 and median cash flow money that comes out of the business over the coursse of a year — of Nationally, fewer deals are getting done. Across the Uniteed States, BizBuySell reported 1,040 closed dealss in the second quarter, down about 50 percenft from the same time ayear ago.
The mediah sales price for those closed transactionswas $160,000 in the seconsd quarter, compared with $200,000 a year ago. In addition to the declind in closed transactions, business-for-sale listingws are down 15.7 percent across the accordingto BizBuySell. “We haven’ t seen any signs that we are on thereboundd yet,” Handelsman said. “I don’t know when the recovert is goingto happen, but I feel confideng I know what it’s going to take for it to The reason valuations continue to tumblre is that buyers aren’t willing to pay as mush as sellera are trying to get, Handelsman noted. Sellers have to becomse more realistic, he said.
The liquidity market must also easeso would-bw entrepreneurs can raise the money needed to buy “Buyers don’t have cash and don’t have access to so they are buying businesses at lowerd valuations,” Handelsman said. Kay Brown put her Alpharetta-area gelatop shop on the market about two and a halfmonthws ago, after she decided to start her While Brown has received interest from potential buyers, getting financing througbh has been a challenge. The banks are askint buyers to make a 20 percenttdown payment, Brown said.
That’s a “bigb difference from when I originally startedthe business,” she said, recallinhg that she was required to put down less than 10 percengt about three years ago. Banks have also raisedc the minimum they are willing to Brown said. That has disqualified some potential buyerd who needed toborrow less.