Friday, October 8, 2010

It’s not a secret that 2009 was a tough environment for business sale transactions. With most of the nation struggling just to stay afloat, the market was bare. There were few candidates with the ability to buy, few business owners willing to sell with values so depressed, and few lending institutions with the desire to finance transactions. So everyone hunkered down, waiting for a recovery.

Now in 2010, we’re starting to see many of these buyers and sellers come out of hiding. More deals are getting done, and they are getting done in less time. Here at Chicagoland Sunbelt, we have seen some steady trends in this year’s sales.

To the surprise of many of our current and prospective clients, deals are being consummated in record times and at solid valuations. We attribute this strong rebound to many things including pent-up buyer demand and good companies that have been able to weather the recession.

Perhaps the most surprising trend has been the speed at which some of our engagements have been able to close. Deals closed this year took approximately 191 days from the signing of the engagement to closing date, with several high-profile listings taking less than 120 days.
The speed of closing is a very telling measure of establishing the proper pricing and marketing strategy to match the pent-up demand. To put these numbers into perspective, even in the best markets most business sales take 270 to 360 days to close.

The other trend has been the large percentage of deals receiving multiple buyer offers. Eighty-two percent of the deals closed this year have received multiple offers, with many of these deals receiving four or more offers. This market dynamic has enabled our clients to secure solid valuations and maintain an 85% selling price to original asking price.

A key driver of robust activity has been the shared risk by buyers and sellers. Without the leverage of a bank to finance an acquisition, buyers are coming to the table with a larger percentage of the down payment, and owners have realized that seller financing is the only viable alternative to secure a deal. In fact, 67% of our closed deals in 2010 have included seller financing and, in many cases, the percentage of the deal financed by the seller has exceeded 40%.

The business-for-sale market has clearly changed, but those parties willing to adapt and be creative can still get good deals done.