Make us your home page
Instagram

You might want to wait to sell your business

Think selling a house here is tough? Try selling a small business.

The median asking price for businesses for sale in the Tampa Bay area stands at $195,000. A year ago, at the end of the second quarter of 2008, the median asking price was $225,000.

"Clearly, this is the worst market for selling a business since we've been tracking quarterly data these two and a half years," says Mark Handelsman, general manager of BizBuySell.com, a national online business-for-sale marketplace based in San Francisco and part of LoopNet Inc.

BizBuySell boasts an inventory of more than 50,000 businesses for sale. More than 850 of those are based in the Tampa Bay area. The anemic sales climate for these businesses feels a lot like the climate for home sales.

Sellers still want too much. Buyers still offer too little.

No surprise, fewer deals nationwide are getting done. Year over year, Handelsman says he has seen a 50 percent drop in completed business sales. He cites two reasons for the sharp dropoff.

Many business owners are holding off on selling until the economy recovers. And thanks to tight credit conditions, buyers are finding it much tougher to find the financing to get a deal done.

"Even buyers trying to borrow money against their homes are finding it more difficult," Handelsman says.

In the three months ended June 30, 48 Tampa Bay area small businesses were sold at an average sales price of $120,000, down from their $127,000 average asking price. Some samples:

• An English pub in Pinellas County (asking $1.9 million, sold for $1.1 million).

• A Pasco maker of firearms accessories (asking $283,000, sold for $281,000).

• A Hillsborough office park deli/cafe (asking $22,000, sold for $18,500).

• A Pinellas liquor store (asking $675,000, sold for the same).

For the sake of nearby comparison, in an analysis of 37 completed business sales in Orlando in the second quarter, transactions averaged just $80,000, or 85 percent of their asking price.

In this economy, some types of small businesses naturally outdo others.

"Businesses that do better tend to depend less on discretionary income," Handelsman says. A high-end restaurant is less likely to succeed these days, for example, than a Subway sandwich franchise. And what of a health care service business that helps get the elderly to their dialysis appointment? "Those customers still need to get there," he says.

A big shift in the business-for-sale market is the sharp increase in seller financing. Before the credit crunch, a buyer typically would come up with 10 to 30 percent of the asking price in cash, then get a loan from a bank or the federal Small Business Administration for the rest.

No more. Handelsman says loans are harder to come by, forcing sellers to offer financing, typically loans ranging from three to five years. So a buyer offering 20 percent cash now might get an SBA loan for only 50 percent of the price, with the seller lending the remaining 30 percent.

There is a silver lining in all this, at least for the Tampa Bay area. While completed sales of businesses are down dramatically nationwide by 50 percent, BizBuySell figures show completed sales slipped only 20 percent in the Tampa Bay area in the second quarter compared with a year ago.

That puts the Tampa Bay area No. 3 in the nation, behind No. 1 Dallas and No. 2 Las Vegas, among metro areas most recently suffering the smallest declines in business sales.

Now, a 20 percent drop may not sound worthy of bragging about. But it sure beats places like Atlanta (down 62 percent), Miami (down 69 percent) or the country's worst metro area — Raleigh, N.C. — down a surprising 89 percent in the quarter from a year ago.

Robert Trigaux can be reached at [email protected] or (727) 893-8405

You might want to wait to sell your business 07/18/09 [Last modified: Saturday, July 18, 2009 4:31am]
Photo reprints | Article reprints

© 2017 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Black entrepreneur says city stiffing him on project after he endorsed Rick Baker

    News

    ST. PETERSBURG — A prominent African-American resident says his endorsement of mayoral candidate Rick Baker has led city officials to freeze him out of a major construction project along the historic "Deuces" stretch of 22nd Street S.

  2. Sen. Nelson urges FEMA to examine high number of denied flood claims

    Banking

    Sen. Bill Nelson urged FEMA on Tuesday to ensure fairness, proper oversight and transparency in processing Hurricane Irma aid following a report by the Palm Beach Post that 90 percent of Irma claims under the National Flood Insurance Program had been denied.

    Sen. Bill Nelson is calling for FEMA to ensure the flood claims process post-Hurricane Irma is fair and ethical following reports that 90 percent of claims under the National Flood Insurance Program were denied. | [Times file photo]
  3. Amazon expands in Tampa with Pop-Up shop in International Plaza

    Retail

    TAMPA — A new retailer known largely for its online presence has popped up at International Plaza and Bay Street.

    Shoppers walk past the new Amazon kiosk Tuesday at the International Plaza in Tampa. The kiosk, which opened last month, offers shoppers an opportunity to touch and play with some of the products that Amazon offers.
[CHRIS URSO   |   Times]

  4. Study: Florida has fourth-most competitive tax code

    Banking

    Florida's tax code is the fourth most competitive in the country, according to a study released Tuesday by nonprofit group Tax Foundation.

    Florida has the fourth-most competitive tax code, a study by the Tax Foundation said. Pictured is  Riley Holmes, III, H&R Block tax specialist, helping a client with their tax return in April. | [SCOTT KEELER, Times]
  5. Trigaux: On new Forbes 400 list of U.S. billionaires, 35 now call Florida their home

    Personal Finance

    The latest Forbes 400 richest people in America was unveiled Tuesday, with 35 billionaires on that list calling Florida home. That's actually down from 40 Florida billionaires listed last year when a full 10 percent listed declared they were Floridians by residence.

    Edward DeBartolo, Jr., shopping center developer and  former San Francisco 49ers Owner, posed with his bronze bust last year during the NFL Hall of Fame Enshrinement Ceremony in Canton, Ohio. DeBartolo remains the wealthiest person in Tampa Bay according to the Forbes 400 list released Tuesday. 
[Photo by Joe Robbins/Getty Images]