Owners looking to sell their business are asking for less money but that means buyers with cash can find some great deals.
According to BizBuySell.com, the median asking price for a company in the Tucson market fell 4.3 percent during the third quarter based on the 205 Tucson-area businesses they have listed on their site.
The median asking price was $225,000 in the third quarter, down from $235,000 in the third quarter of 2007.
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Business brokers Lea Marquez-Peterson of TucsonBizForSale.com and Bob Bohacik with Sunbelt say they have seen the decrease in values in area businesses.
The economy accounts for part of the reason is the buyer pool has become smaller.
"The credit crunch has frozen business lending which makes it hard to finance a business," Marquez-Peterson said. "It also depends on if real estate comes with the deal or not. A gas station with land is not too bad, but if you’re buying a tanning salon in a strip center, that’s pretty hard to get lending on right now."
The freeze in credit is causing some owners to offer seller-carry-back financing.
"Unfortunately, we are negotiating seller carry backs for several listings now," she said. "There are risks to the seller. It really depends on how comfortable the seller is with the deal and the buyer, but at this point there really aren’t a whole lot of options."
Bohacik said, like in any other down market, people are looking for opportunities.
"I’m as busy as I’ve ever been," Bohacik said. "But the profile of the buyer out there right now has changed. There are a lot more strong buyers with cash in the market now. Whereas I think some of the weaker buyers who were looking to get into their first business are being more protective of their net worth right now."
So what’s an owner looking to sell supposed to do?
Marquez-Peterson and Bohacik said it can take from six months to a year to sell a business.
"If they have flexibility they may want to wait for after the election and after first of year see if there is strength, but it’s hard to say what the market will be like in nine months," Bohacik said. "Most business owners though are able to decide when it is the right time for them to sell and list their business when they feel it’s time. I tell them to not even look at today’s market."
Marquez-Peterson said she expects business values to be down overall until the economy picks up and people begin spending money again.
"The valuation of a business depends in most cases on the net cash flow to the owner," she said. "Many businesses are operating at a loss or break even now. That needs to turn around before values go up."
Contact reporter Joe Pangburn at jpangburn@azbiz.com or (520) 295-4259.
Need a business broker?
Head to www.azbba.org/southern/brokerlist.asp for a list of the business brokers in Southern Arizona. Business brokers can assist with business valuation, financial analysis, purchasing and selling a business, lease assumptions and more.
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