Five months after he opened PNK Pro Beauty Supplies in Glendale, owner Karhen Abramyan has put the shop up for sale. He's gotten a few lowball offers in the last few weeks, but no deal.
"I have $60,000 in inventory here, I can't just sell it for $50,000," said Abramyan, who is asking $95,000.
Blame the bad economy. Buyers and sellers of California businesses are hampered because the vast pools of money that once fueled sales have dried up.
"This is probably the toughest time that I've seen in my 25 years of buying and selling businesses in Southern California," said Peter Siegel, owner of BizBen.com, an online clearinghouse in San Ramon, Calif., that lists small and mid-size California businesses for sale and reports statewide sales data.
Money is harder to come by as lenders shy away from business acquisition loans, stock market portfolios shrink and the availability of home equity loans disappears along with home values.
Many sellers are suffering because the economy has hammered cash flow, which is a big part of the value of their businesses. That means they can't get a price as high as they recently might have. Those who have to sell are often forced to accept offers they would not have considered before the recession. Those who can wait have pulled their sales listings.
Others aren't putting their businesses up for sale at all, hoping to outlast the downturn and get a better price later.
In Los Angeles County, 2,033 businesses sold in the first six months of the year, down 32% from the same period last year, according to BizBen.com. Statewide, 7,793 businesses sold, off one-third from the year-earlier period.
The website has seen its own listings, now at about 8,000, drop 20% in the last 12 months, said Siegel, who culls his data from brokers and county recorders.
Business brokers "are on life support," said Gary Anderson, a broker and principal at West Coast Commercial Credit & Investments in San Diego.
Sales of Southern California bars, dry cleaners, manufacturers and other small firms are expected by many to continue to fall in the near term.
"In January and February, I personally took probably two dozen calls from San Diego companies whose name I immediately recognized and who had been in San Diego doing business successfully for decades," said Bill Lange, a VR Business Brokers franchisee in San Diego. "They were saying, 'I'd like to know if I can sell my business, because if I can't, I'll have to close my doors.' "
