Eastern Pennsylvania business brokers say that, so far, 2014 has been pretty good for them. After years of stagnant activity, they are fielding lots of customer calls, taking bank inquiries and giving advice on how to buy and sell a business.
“It is a good time to get into the marketplace. Banks want to get back into the lending game, which is a good sign that we are no longer in a recession,” said Kevin Freeman, managing partner of Stony Hill Business Brokers, which has an Allentown office. “There is a renewed enthusiasm and more aggressive plays from banks. There are more deals out there now than there were over the last five years.”
Area business brokers seem to agree that the industry is on the road to recovery with buyers’ confidence growing and many young, up-and-coming professionals preparing to open their first business. There also appears to more lending and financing options available, which is motivating people to join the market.
It is leading to a healthy market in terms of buying and selling businesses. But for those who are inexperienced, what should they do?
Experts said that timing is critical.
“To start with, a business owner should ask themselves, is it the right time to sell my business? What do I need to accomplish?” said Thomas Kerchner of BMI Mergers & Acquisitions, which has Reading, Allentown and Philadelphia offices. “There is certainly a lot more confidence among buyers. While on the sellers’ side, they have held onto their business for the last several years while things were slow, and now they are ready to sell.”
In Allentown, David Byala, owner of Leyden Associates, said he advises potential business sellers to see if they are profitable and how long they have been in business before they liquidate their company.
Freeman, who said he has completed 205 transactions since 2005, said that when customers call to sell their business, he suggests a valuation of the company, advises on a contingency plan and looks to see if their financials are in order.
On the buy side, he establishes an advisory team and determines how much the potential buyer can put into a business.
“We feel the Lehigh Valley is the biggest area for growth. We see an influx of commercial activity, development and mergers and acquisitions there,” said Freeman, adding that health care and manufacturing are two industries that are recession-proof in the business brokerage world.
Barry Miller, president of Lehigh Valley Business Brokers in Allentown, said he has received more calls from clients in the last few months than he has had in the last few years. While he was on vacation in late June, he took a handful of calls in one day because he didn’t want to turn down the business, he said.
He said that, during the recession, nearly half of the business brokers in the nation went out of business. But, now things are starting to bounce back, partly because of the robust stock market.
“We are starting to see a huge pickup in business. One thing is that we are getting more calls from corporate buyers again, and those calls stopped entirely during the recession,” Miller said.
Much of Miller’s business stems from his company’s online listing on websites such as bizquest.com and bizbuysell.com. He said that people browse these sites for businesses that are for sale, and it is the best way to drum up new business.
Manufacturing, health care and service-oriented fields make up a bulk of his business transactions while the food service industry is not so appetizing.
Byala acknowledged that the market has improved. He said there are a lot of good business opportunities available in 2014 and more people to invest in them.
He also said that sellers are being realistic about what they want for their company.
Kerchner at BMI agreed and is optimistic.
“I think we are in for a couple good years, as long as there are no government shutdowns,” he said. “That stops everything for a while.”