Prospective sellers getting less for their businesses | NJ.com

Prospective sellers getting less for their businesses | NJ.com

Published: Wednesday, July 21, 2010, 6:30 AM
Sean Sposito/The Star-Ledger Sean Sposito/The Star-Ledger

As the economy struggles to find a toehold, people are increasingly trying to sell their ailing storefronts — and for less, according to an online marketplace that unloads the properties.

So far this year, the typical asking price of a New Jersey business has dropped roughly 7 percent to $275,000, said BizBuySell.com.

The reason is simple: Overall cash flow has been stifled in the downturn.

Here in the Garden State, the amount of money a typical owner generated by the end of June was down 8 percent to $104,000 in the second quarter compared to last year, the website said.

Nationwide, the picture doesn’t look much better.

The median price of businesses for sale was $155,000 in the second quarter, 3 percent less than the same period in 2009.

The number of closed deals, however, is on the rise.

More than 1,100 transactions occurred in the second quarter, 66 more than in the corresponding time a year ago.

Experts say the recent spike in activity is being driven by franchises. The move marks an upswing for the battered commercial real estate market and a return to the smaller tenants of the pre-boom era.

The increase in deals also brings welcomed relief to landlords, who are all too eager to make heavy concessions in order to close deals.

The transactions have given smaller tenants more entree into premier retail corridors.

But with the state’s jobless rate near historic highs, it’s unlikely consumers will be able to drive sales for those new business owners in the near future.

Last week, the New Jersey Department of Labor and Workforce Development reported that unemployment had only dropped 0.1 percentage point to 9.6 percent, slightly above the national rate of 9.5 percent.

The state agency reported that New Jerseyans lost 7,200 jobs last month, alone.

THEN AND NOW

The 2010 second-quarter economic data is based on 2,019 New Jersey-area businesses listed at BizBuySell.com. They include listings from local business brokers, as well as “for sale by owner” listings that have been posted by the business owner without the assistance of a business broker. Here are some of the highlights:

• If you want to buy a business in New Jersey, the current median asking price of businesses for sale is exactly $275,000.

• One year ago, at the end of Q2 2009, the median asking price for businesses in New Jersey was $295,000.

• The Q2 2010 listed businesses in the New Jersey area had a median revenue of $400,000, down from $417,700 at the same time last year.

• The median cash flow, meaning the money that comes out of the business over the course of a year, is $104,000, versus $112,631 last year.