According to the BizBen Index, an improvement in closed escrow volume has been spotted at the end of 2010, with the numbers showing an improvement over 2009. Does this mean that California businesses are bouncing back?
“What we’re seeing is the impact of the innovative strategies employed by California’s small business entrepreneurs,” according to Peter Siegel, MBA, Founder and President of BizBen.com, parent group of the Index. “Sales were down for most of the first nine months of 2010 compared with the same periods the previous year, because of reduced access to funds and uncertainty about the economy. But resourceful business buyers, owners/sellers and their intermediaries have gone back to the drawing board to come up with ways to successfully complete transactions, despite those hurdles.”
The BizBen.com Index reported the fourth 2009 quarter total of closed business deals was 3,461. The volume for all of 2010 was 13,329, representing a 6.6% decline from the 14,277 sales completed during 2009.
Among the measures used to overcome some of the problems that had discouraged business sales earlier in the year were “increased instances and greater dollar value of seller financing, earn-out strategies and sales of portions of companies offered on the market, with the owner/sellers retaining a portion,” said Siegel.
Southern California’s largest counties registered fewer closed escrows in 2010 compared with the prior year. Los Angeles County posted 3,557 transactions last year, and 3,769 in 2009. Orange County buyers took over 1,205 small and mid-sized businesses in 2010 vs. 1,336 in the prior 12 months. San Diego County sales dropped from 1,401 in 2009 to 1,150 for 2010. Some 577 businesses changed hands last year in San Bernardino County, a decline from the 713 deals completed the year before.
The biggest Northern California counties showed improvement during that period, with San Francisco posting 535 deals in 2010 and 502 in 2009, and Santa Clara County registering 768 sales for the just completed year, up by 50 sales from the year before. There were 393 closed transactions in Fresno County in 2010, compared to 388 the year before.
The Index also reported that December 2010 sales were up throughout the state by about 5%, to 1,253 closed deals from the 1,193 figure posted in December of 2009.
Photo by Kevin Dooley