Like houses, businesses on Long Island are changing hands at a rapid pace, according to experts in the field.
"We’re busier than pre-COVID in terms of working on transactions," said Ken Stein, managing director of Kensington Company & Affiliates in Roslyn Heights, which specializes in mergers, acquisitions and franchise sales/development.
U.S. business sales in the third quarter
Source: BizBuySell, which reports sales submitted by brokers
Low interest rates are one factor, Stein said, and another is the improvement in companies' balance sheets since last year, which has made the businesses more attractive to buyers.
Anthony Citrolo, a managing partner in the Melville merger and acquisition firm The NYBB Group, agreed that sales of businesses are thriving: "We have been busy with more new clients for Q4 than at any time in recent memory," he said.
But while the field is "significantly better than 2020," there’s still some reluctance from buyers because of the uncertainties of the pandemic, Citrolo said.
And, of course, there's the human factor. The desire to buy or sell -plays a huge but intangible role.
Baby boomer Kathie Kitts, who owned Artisan House, a gift shop in Northport Village, for 50 years, said she was thinking of selling before the pandemic and eventually found the right buyers in couple Ron Meyer and Randi Gothelf.
"It was time," says Kitts, who sold in November. "I want to hang out with my grandkids."
Meyer has worked in retail for close to 40 years, including in the 1980s and mid-'90s, when he owned record stores with his brother. Over the past 20-plus years, he’s worked in retail management mainly for large chains, but had been working for a smaller store in Huntington when he was laid off in June because of COVID. He searched for a job, but nothing appealed to him.
"Looking for jobs, it was all big-box stores again," says Meyer. "At 59 years old, do I really want to start working for another corporate conglomerate?"
He and Gothelf, currently a hairdresser in East Northport, decided they liked the village locale of Artisan House, as well as the business’ longevity.
"It was a good fit," Meyer said, noting they’ll maintain the feel of the shop but plan to expand inventory and hours.
Business price tags
Meyer didn’t disclose the sale price but, according to BizBuySell, which tracks and analyzes U.S. business-for-sale transactions, the median Q3 sale price nationally hit a new high of $349,500, 17% above the previous year. The median Q3 sale price in New York was $370,000, up from $292,500 in Q2 2021.
Nationally, closed transactions in the third quarter were up about 11% over the previous quarter, and about 11% year-over-year, according to the latest BizBuySell Insight Report.
The company's transaction data for New York State told a different story, though, with a 28.7% drop in the third quarter of this year from the second, with a smaller dip (4.6%) in the first three quarters of 2021 vs. 2020. The company analyzed the state numbers at Newsday's request. Long Island data was unavailable.
Stein said transactions reported to BizBuySell — a San Francisco-based business-for-sale online marketplace — are voluntarily submitted by brokers and therefore don’t show all activity, which means New York numbers could be higher.
Adam Debussy, marketing director at BizBuySell, said that, nationally, the market continues to recover, "but right now there’s not enough businesses to meet the demand of buyers."
But that may change as more businesses recover their losses and show improved financials, bringing more sellers to the market, he says.
Would-be-entrepreneurs may also want to consider buying into a franchise, which is also seeing increased activity.
"I’m busier than I’ve ever been," says Tom Scarda, a Wantagh-based franchise consultant and president of The Franchise Academy, which matches individuals with franchising businesses.
He said many buyers want to control their own destiny rather than work for someone else, and pandemic-resistant franchises are doing well, including anything related to home services.
"It’s more about the new normal and what can I do differently to protect myself if this thing never ends or we have another pandemic," Scarda says.
More owners are contemplating selling their businesses. According to BizBuySell, 28% of business owners surveyed said they plan to sell in the coming year, either due to retirement (52%) or burnout (38%).