Slow economy means Central Indiana businesses are changing hands at a slower pace

Slow economy means Central Indiana businesses are changing hands at a slower pace
Slow economy means fewer deals, but prices are holding steady

By Nicole Blake
Posted: July 4, 2009

Have a business for sale?

Now is not the time.

Fewer Indianapolis businesses are being sold, and those that do make it to the closing table are netting a lower price with sellers footing more of the financing responsibility, according to area business brokers.

The number of businesses sold in Indianapolis and Carmel and reported to BizBuySell.com dropped 77 percent in the second quarter of 2009 compared with the same period last year, according to the online service. BizBuySell.com is the largest online directory of small businesses for sale nationwide.

Only three transactions were reported to BizBuySell.com in the second quarter this year, compared with 13 during the same time last year, BizBuySell reported.

The median sale price was $250,000, the same as in the second quarter of 2008.

Blame it on the economy.

"People looking (to purchase a business) don't have as much money as they had before," said Mike Handelsman, general manager of BizBuySell.com.

Handelsman said rising unemployment has increased the pool of potential business buyers, but they aren't equipped to assume the risks in a down economy.

"To make matters worse, banks just aren't willing to back business purchase transactions to the same level that they had in the past," he said.

BizBuySell.com issues a quarterly report that examines national business sales transactions.

More than 70 major metropolitan areas had 1,040 transactions during the second quarter of 2009. That was a 50 percent drop from the number of businesses sold in the same period last year.

Businesses typically stay on the market six to 12 months, but the sour economy has added 60 to 90 days to the waiting period, said Larry Battershell, a business broker for Sunbelt Indiana Business Resource. The company represents business sellers.

Especially hard-hit are businesses in the food and beverage industry, Battershell said.

The prices for such businesses have dropped 10 percent to 30 percent among those businesses sold through his company.

Rather than risk netting less on a sale, business owners are waiting, said Battershell.

"For those that aren't under immediate pressure to sell, they've pretty much gone to the sidelines," he said.

Additional Facts
BUSINESS FOR SALE
This is a sampling of some of the 103 Indianapolis-area
businesses listed for sale at BizBuySell.com.
»Bar/restaurant in Broad Ripple: $250,000.
»Coffee shop and cafe near the Geist area: $175,000.
»Chiropractic practice in Hamilton County: $135,000.
»Day-care center in Johnson County: $110,000.
»Dry cleaning plant west of Indianapolis: $195,000.

Source: BizBuySell.com