More small businesses in Houston were sold in 2009 than in any other city in the U.S. Why? Because buyers are positioning themselves for the future.

We have been bragging about Houston’s economy and the engine behind it for a long time. Pick your industry; we’ve touted it.

Houston Business Journal reported, “Houston-area small business sales outpace nation,” which is the message we’ve been delivering and the trend we’ve been experiencing for years.

Article From the Houston Business Journal

Houston Business Journal (HBJ) :

Small business owners in the Houston area who wanted to sell their companies in 2009 were more successful in finding buyers than entrepreneurs elsewhere in the United States.

Local owners also got more money for their businesses than sellers nationwide, according to statistics from BizBuySell.com, a large online marketplace for selling businesses.

A total of 107 companies in the Houston area were reported sold by business brokers in 2009, down by 7 percent from 115 sales reported to BizBuySell in 2008. In comparison, BizBuySell reports sales were down 28 percent year-over-year for the country as a whole.

The median sales price for a local business in 2009 was $155,000, up 19.2 percent from the previous year’s median price of $130,000. The median sales price nationwide was down 16 percent.

“Prices didn’t fall,” says Mike Handelsman, general manager of BizBuySell. “That’s the most surprising thing to me.”

Houston companies also outperformed those in other parts of the nation in revenue and cash flow, he says.

Local businesses sold in 2009 had median revenue of $366,954, as compared to $287,000 in 2008. And the companies’ cash flow increased to $101,949 from $85,668.

“That’s a really unusual result,” Handelsman says. “That’s different from what we’ve seen in the total United States.”

Here’s a partial list of our economic posts over the last few years:

Why Should You Consider Selling Your Business in 2010? (Dec. 2009)

Texas Restaurant Industry – Biggest in the Nation in 2009 (May 2009)

Why Does Houston Have the Second Most Fortune 500 Companies in the Nation? (May 2008)

Texas No. 1 Economy In The Nation, Houston Leads The Way (Feb. 2009)

Houston, Keep Your Seatbelts Buckled As Our Economy Takes Off (June 2008)

Inc. Magazine – “It’s a Seller’s Market for Buying Businesses.” (Apr. 2008)

Got Business? Houston Does — Here’s Why! (Apr. 2008)

Selling A Business In Houston – It’s Still Hot! (Feb. 2008)

Houston Logistics Industry Is Top Rated In The Nation (Oct. 2007)

Houston Leads Future of Alternative Energy (Dec. 2007)Houston Economy – Manufacturing and Transportation Sectors (Dec. 2007)

Houston – A World-Class City and Economic Powerhouse (Dec. 2007)

Texas Ranks In Top 10 Richest Economic States In The U.S. (Dec. 2007)

Rocketing Houston Economy — Small Business 101 (July 2007)

Houston Economy Surpasses Expectations — Stirs Small Business Activity (Mar. 2007)

Houston is Booming — It’s Not Only the Weather That’s Hot Down Here (Mar. 2007)

Copyright 2007-2013. All articles are authored by Rose Stabler unless otherwise noted. Certified Business Brokers, Texas. All Rights Reserved. 

Buying or Selling a Business? Let Certified Business Brokers Help Guide You to a Successful Deal

For more than 50 years, we have worked closely with an extensive array of clients, helping them sell and buy with confidence. Our experience and dedication will help you find the opportunity that’s the perfect fit for you. 

We invite you to contact us for more information.

Houston Business Acquisition Market Will Remain Brisk

The current status of the small business marketplace in Houston is dynamic. Buyers in every category are plentiful, our economic position is one of the strongest in the nation, business policies are in place for continued prosperity and growth, interest rates are at historic lows, and capital is available for business acquisitions.

Fueling the Houston market are the different categories of buyers: Individuals, Strategic Buyers, and Investment Buyers. For example, a variety of people in the Individual Buyer category are:

• Early baby-boomer corporate retirees
• Corporate refugees who have suffered a downsize
• Foreign buyers seeing U.S. businesses as investment opportunities while the dollar is still valued lower against their own currency
• 30-something up-and-comers aggressively buying and building

Strategic and Investment Buyers are also actively looking for opportunities to take part in Houston’s prosperous future outlook. Increasingly, corporate America, publicly held and privately held companies, is acquiring smaller firms as part of their strategy for growth and innovation. Private equity groups, too, are actively seeking add-on acquisitions in Houston for their investment portfolios.

Each of these buyer categories varies in their acquisition criteria regarding the sectors they are targeting and the revenue ranges they require. However, we have seen one major common trend occurring in both of these buyer categories. 

More and more private equity firms and corporations are looking for smaller businesses. These strategic and investment buyers, in increasing numbers, are considering smaller businesses with lower minimum cash flow and total revenue generation than they did just one year ago. 

We expect this trend to accelerate, especially in Houston, for several reasons. But here are a few specific reasons:

• While the national credit crunch may have impacted the larger transactions, the smaller transactions are still very active because all buyer categories for privately held, small enterprises are looking to put their money to work.
• Houston banks have been minimally affected by the credit crisis. First, because of the area’s relatively strong economy, and second, because many banks have been spared major damage from the subprime mortgage market because most of the banks focus on servicing small businesses (Houston Chronicle Dec. 2007)
• Houston is called home by the second-largest number of the Fortune 500 companies in the nation, second only to New York City. Houston has been steadily adding to its collection of Fortune 500’s for the past several years, while New York’s number has declined. Houston stands well ahead at the #2 spot with Dallas, Chicago, and Atlanta lagging considerably behind.
• Houston’s pro-growth, no nonsense politics are major factors driving developers and other capitalistic-minded investors to Houston. Business experts and economists say it’s a matter of simple economics — low taxes, affordable land and an expanding labor force.
• Houston is one of America’s top recession-proof cities (Forbes, America’s Recession-Proof Cities, April 2008).
• Houston’s future outlook is predicted to flourish. The city is uniquely situated and ready to capitalize on the longstanding megatrends that are transforming the global economy (Newsweek June 2008, “Houston, We Have No Problems“).
• Houston is headed toward becoming not only the leading city of Texas and the South, but also a player on the global scene: it is emerging as one of the world’s great cities. (Joel Kotkin, an internationally recognized authority on global, economic, political and social trends, in his April 2008 article, “Lone Star Rising”).
• Most importantly, the number of buyers looking for acquisitions far exceeds the number of sellers.

CBB Helps You Understand and Take Advantage of Current Market Conditions

Not sure how the current economy is affecting small business acquisitions? Let CBB guide you throughout the process.  Whether you’re considering a sale in the next year or simply want to know where your business stands, Certified Business Brokers can help. Call us at (713) 680-1200.