Orange County Register

The sale of small and mid-sized businesses in Orange County fell off a cliff in August, according to BizBen, the California businesses-for-sale web site.

During the month, 189 local businesses sold, less than half the sales in August 2007.

Surrounding counties and the state all experienced dramatically lower sales, with the exception of San Diego, where sales rose in comparison to a seemingly poor August 2007. Here are BizBen’s numbers:

While the dog days of August are typically slow in the business sales industry, something else was going on this year, said Peter Siegel, president of the San Ramon-based web site that lists only California businesses that are for sale.

“There were a lot of distractions this year, specifically the Olympics and the (presidential) elections,” he said. “And anecdotally more people seemed to take vacations in August than in past years.”

One more factor: The industry is another casualty of the sub-prime lending crisis and housing slowdown, well documented by Register bloggers Matt Padilla and Jon Lansner.

Here’s why:

• Lenders, including those participating in the U.S. Small Business Administration’s guaranteed loan programs, are tightening requirements to trim their risks. That makes it difficult for would-be business buyers to get a loan to help with the purchase.
• Home equity traditionally has been an important source of capital to buy a small business, at least the down payment. For many people, the decline in housing values has wiped out their equity. No equity, no cash to buy a business.

“I’ve never seen a market like this in all my years in business sales,” Siegel said.

He expects the market to recover from the August slowdown by the second week in September, after people get back from vacation and the kids get back in school. But then the ongoing credit problems will suppress the market for who knows how long.

“I actually see a better fourth quarter, not on a par with last year but better than the third quarter,” Siegal said.

OTHER STORIES:

• O.C. businesses much more affordable than homes
• Sale of O.C. businesses fell 22.6% in first half of  ’08
• O.C. business bankruptcies soar 153% in April
• 50% of business sales fall through
• California ranks 2nd in mortgage fraud
• Is that a cell phone in your TV? Broadcom hopes so
• Fast-growth firms: O.C. has 15
• Which O.C. firms made ‘great workplaces’ job site?

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