| Buy a business in 2010. Things are shaping up to make | | | | Demographics - Pittsburgh, Cleveland, Morgantown, |
| it one of the best years ever to do so. | | | | Wheeling and Erie are all "rust belt" cities with |
| I offer you this advice as someone on the "inside". I am | | | | substantial baby boomer populations. Many of these |
| a business broker. I spend my life engaged in activities | | | | aging baby boomers are business owners soon to |
| such as valuing small businesses, planning exit | | | | retire. Their children have gone away to college or |
| strategies for business owners, locating financing for | | | | have relocated to new cities, built lives of their own |
| transactions and creating markets in which private | | | | and have little interest in the family business. This |
| businesses can be sold. I do this primarily in Pittsburgh, | | | | leaves the baby boomers anxious to exit but with few |
| PA but also spend time as far north as Erie, PA as far | | | | options outside of a third party sale. |
| south a Morgantown and Wheeling, WV, as far east | | | | Last Year for Low Capital Gains Rates - Depending |
| as Altoona and as far west as Cleveland, OH. The | | | | upon how a business sale is structured, certain |
| similarity between all these markets when it comes | | | | amounts received by sellers in the sale of their |
| time to buying a business is that the time is right, right | | | | business will be taxed as capital gains. Capital gains |
| now. | | | | rates are currently 15% and set to expire on |
| Here's why: | | | | December 31, 2010. It is anticipated that rates will |
| Realistic Seller Expectations - Back in 2007 when the | | | | increase to at least 20% in 2011. So, business owners |
| M&A market was booming many small to | | | | considering selling their business will save 5% in taxes |
| mid-sized business owners were seeing dollar signs. | | | | by consummating a sale in 2010 versus waiting until |
| Businesses were being sold at exorbitant valuations | | | | 2011. |
| and banks were financing deals freely. With the | | | | Low Interest Rates, Increased Access to Credit - |
| market collapse that occurred in 2008 and 2009 | | | | While the times of free flowing capital have come and |
| business owners expectations have changed. The | | | | gone, so have the times of frozen capital. Access to |
| bubble has burst and seller's expectations have | | | | capital has increased over the past several months |
| realigned accordingly. | | | | and that trend should continue through 2010. Buyers will |
| Increase in Quality Inventory - During 2008 and 2009 | | | | be required to make an equity contribution of |
| many of the businesses being offered for sale by | | | | approximately 20% of the deal value and sellers may |
| brokers and intermediaries were not of the highest | | | | be required to take back some paper. But, rates |
| quality. Businesses were listed because the owners | | | | remain low and for "qualified" buyers, capital is |
| were financially forced to do so, not because the | | | | accessible. |
| business was ready to be sold. Desperation flooded | | | | In isolation these factors may not provide |
| the market. It was nearly impossible to tell the | | | | overwhelming support for 2010 being a great time to |
| difference between a bargain and a bankruptcy. Since | | | | buy a business. But collectively, they make an excellent |
| then things have changed. The fledgling businesses | | | | argument for 2010 being "the year" to buy a business |
| have faltered and the inventory of businesses for sale | | | | in rust belt cities like Pittsburgh, Cleveland, Morgantown, |
| has been thinned. Only the strong have survived. | | | | Erie and Wheeling. |