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Which is the Best Business-For-Sale Website?

April 6, 2011 By Ney

Building a website that puts business buyers and sellers together, then charging a subscription fee for the service must be fairly easy to do. Why else would there be over twenty sites doing it, with more appearing each year? The fact is, it isn’t necessary for buyers and sellers to hit all the sites. Here is why.

Let’s think about that from the point of view of a business buyer. A serious buyer is going to start looking for businesses, and very quickly they are going to find out that the place to look is on the web. No one uses newspaper ads or journal ads any longer for small businesses (although we still do for larger ones). A few quick searches on the web, and they are likely going to wind up on one of the top sites. The top sites are at the top of the Google natural rankings and the top sites also advertise more heavily than the other sites. Really, it is pretty tough not to end up on the top sites within a few days of starting your search.

I’ve done some searches for clients, and as a “buyer” I’ve also realized pretty quickly that the same businesses are listed on many sites, and the common denominators are the top sites.

So what point is there for a broker or M&A advisor to market their clients on 20 sites? Not much, except being able to tell your clients you are marketing on 20 sites. In my opinion it is better to get on the top sites but also use other marketing channels, even good old US Mail and the telephone, to find buyers.

Now there are some differentiation features of some of the websites. For example, mergernetwork.com is for larger companies, businessesforsale.com has better exposure to international buyers and bizben.com is a great site for California businesses.

So which are the best? Well, I wouldn’t just advertise on one or just do your searching on just one, you do want to pick a few – but you don’t need 20. Bizbuysell is owned by the Wall Street Journal and they also purchased Bizquest.com so they are definitely the heavy weight in the industry. You definitely want to use them as a business buyer or seller.  Businessesforsale.com has a bit more traffic than bizbuysell.com; however, they are ranked number one in the UK and Australia and much of their traffic is generated there.  Here are some traffic stats from web traffic stats company Alexa. I’ve compared to Bizbuysell a dozen of the top sites.

The above chart measures the traffic of Bizbuysell.com vs. Businessesforsale.com as well as mergernetwork.com, bizben.com and bizquest.com.  Although businessesforsale.com is ranked a little higher than bizbuysell.com on the Alexa ranking site, I would rank bizbuysell.com higher in the US for US companies.  If a company could be acquired by an overseas company then businessesforsale.com would certainly be a place to advertise.

The above chart again graphs bizbuysell and businessesforsale.com for reference, and compares them to businessbroker.net, businessmart.com and acquireo.com.  None of these sites generate the web traffic that bizbuysell and businessesforsale.com do.

 

Filed Under: Market Conditions Tagged With: bizben.com, bizbuysell.com, bizquest.com

BizBuySell Survey Reveals 2011 Likely to be Stronger Year for Selling a Business

March 1, 2011 By Ney

Bizbuysell’s survey came out today, and there is some hope that the economy is indeed improving.  Bizbuysell is the largest business-for-sale website by a wide margin, having bought Bizquest last year.  And of course this good news is self-serving for Bizbuysell, but some of the stats do indeed suggest that the economy is picking up some steam.

The following is the press release for the survey:

 

BizBuySell.com’s survey results show that business owners who have been hesitant to sell may want to consider preparing their business for sale in 2011.

San Francisco, CA  — BizBuySell.com, the Internet’s largest marketplace for buying or selling a small business, today released the results from a recent survey of the nation’s business brokers on the state of the business-for-sale market.

76% of responding brokers nationwide anticipate that 2011 will be a good year to sell.  A generally positive feeling about economic recovery seems to be the driving factor for the encouraging reports about the business-for-sale market this year. More than two thirds of the brokers – 69% – who anticipate that this year will be a good year to sell a business cite “the economy in general is starting to recover” as driving their bullish outlook. Other top reasons for optimism cited by brokers include “more businesses coming on the market” and “better financing becoming available for business buyers”.

“Business owners who have been sitting on the fence ready to sell for over a year will probably get off the fence and put the business on the market,” explains one responding broker.  “While the economy is certainly not great, it is more stable [than it was] was last year.”

Another respondent expects that 2011 will be a good year for the business-for-sale market “because more people are looking to purchase a business. If financing options improve it could be a banner year for sales.”

“We’re hearing that, while the economy certainly isn’t back to what it was, business owners are starting to feel more confident about it, and they’re seeing a reprieve from the recessionary environment we’ve been in over the past few years,” says Mike Handelsman, Group General Manager of BizBuySell.com and BizQuest.com. “Based on our conversations with business sellers, brokers and buyers, we believe that stable businesses with appropriate price expectations will likely receive quality offers from prospective buyers if they come on the market during the next twelve months.”

Various Factors Continuing to Affect the Business-for-Sale Market

According to the survey, a lack of available financing is still the most common factor preventing business transactions from closing, a trend that is continuing from two previous BizBuySell.com broker surveys conducted in July and November of 2010.  Nearly half of the brokers surveyed, 48%, report financing as the biggest issue hindering business for sale transactions.  Seller unwillingness to lower their asking price is an additional issue, with 26% of the brokers surveyed reporting it as a primary factor preventing sales from closing.

However, other outlying factors, such as legislative changes, seem to be having little effect on the business-for-sale market.  62% of the brokers surveyed said that the Small Business Jobs Act has not affected business owners’ desire to sell. “I think many small business owners are still unaware of the changes and how they can benefit from them,” explains one survey respondent.  “Many of these people are too busy or burnt out to keep up with the latest information.”

The extension of the favorable long-term capital gains tax rate is having a slight effect on the business-for-sale market in 2011, but will likely be a driving factor for business owners looking to sell within the next few years.  54% of the brokers surveyed noted that the extension will have little effect on the market this year, but, as one respondent notes “sellers are unsure of what the rate will be after 2012, so many are positioning a sale within the next two years.”

“As more business owners become aware of the potential capital gains tax rate increase after 2012, we anticipate they may be more inclined to want to sell in the next year or two,” Handelsman notes.

Full Economic Recovery Still Not on the Horizon

While the brokers surveyed are feeling confident about the business-for-sale market in 2011, most respondents still don’t believe business transaction volumes will return to pre-recession levels for at least 18 months.  This is again consistent with BizBuySell.com’s two previous broker survey findings.  Of the respondents, 66% predict that business transaction volumes won’t return to pre-recessionary levels for at least another 18 months, a slight increase from the 62% of brokers who responded similarly in November, and 53% in July.

Full survey results are available to interested members of the media. Local business brokers can be provided as story sources upon request.

About BizBuySell

BizBuySell is the Internet’s largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell currently has an inventory of over 45,000 businesses for sale, and more than 650,000 monthly visits. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry’s leading franchise directories.

BizBuySell was founded in 1996 and acquired by LoopNet, Inc. in 2004. LoopNet operates the largest commercial real estate listing service online, with more than $450 billion of property listed for sale and 6.7 billion square feet of space for lease. With over 4 million members, LoopNet attracts the Internet’s largest community of commercial real estate professionals.

Filed Under: Market Conditions

Good News if You Converted from a C Corp to an S Corp in the Last 10 Years

February 25, 2011 By Ney

Selling the assets of a C-Corp (often buyers will require an asset sale over a stock sale for a variety of reasons) can result in an ugly double tax situation and the IRS doesn’t let one off the hook easily, instead creating a 10 year period conversion period.  The tax paid during that 10 year period is called the Built In Gains (BIG) tax.

However, under the Small Business Jobs Act, if the fifth year of an S Corporation’s recognition period ends before their 2011 taxable year begins, then no tax is imposed on the net recognized built-in gain for the 2011 tax year.  For example, if you are the shareholder of a “S” corp which switched from a “C” corp between more than five years ago but less than 10 years ago, you are not subject to the BIG taxes if you sell the assets of your C-Corp in 2011.

It doesn’t seem like there would all that many companies that would take advantage of this.  However, I’ve written numerous times in this blog that selling a C corporation is a challenge, and those with C Corporations should seriously consider electing S Corporation status.  It seems someone is paying attention to the burden of the BIG tax, so if you haven’t converted, consider doing it now.

Filed Under: Market Conditions

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