M&A Activity Sees Sharp Jump in Dayton Region

From the Dayton Business Journal

Ken Hattan is looking at a record year in business brokerage activity.

The president and broker of Centerville-based Acquisition Services Inc. closed six sales in the first half of the year, compared with just two in all of last year.

“This will be my biggest, or second-biggest, year since the early 2000s,” Hattan said.

Other Dayton-area business brokers also are starting to see improvement in mergers and acquisition activity this year, which may be an indicator of an improving economy.

Looking at second quarter activity in the Dayton market, there are fewer businesses for sale, but they have better revenue, better cash flow and a lower asking price than a year ago, according to BizBuySell. The median asking price of businesses for sale in the Dayton market is $395,000, down from a year ago when the asking price was $450,000. Median revenue of the businesses for sale climbed to nearly $589,000 this year from $500,000 this time last year.

And cash flow, or the money that comes out of the business during the course of the year, also rose to $115,500 this year from $93,000 last year.

More people are looking for opportunities, too, according to BizBuySell. Comparing four weeks this year versus last year, search activity for “business for sale” listings is up nearly 60 percent locally.

Brokers say there are more buyers looking for profitable businesses than sellers of profitable businesses.

Gerry Chadwick, owner of Sunbelt of Miami Valley, said listing activity was relatively slow last year. Business owners believed there were no good buyers and no money available for financing.

Now, he’s seeing an increase in activity.

“For two years, business owners have been saying, ‘Now’s not the time,’” Chadwick said. “Now they’re saying, ‘Now has to be the time.’”

While the first half of the year was slow for Sunbelt, closing one deal in the second quarter, Chadwick said his company will complete four deals in July alone.

There were 14 businesses sold in the Dayton area last year, according to data from BizBuySell. That’s down from 16 businesses sold in 2008. The median sale price also dropped, from $277,000 in 2008 to $117,000 last year.

While local business brokers said the statistics don’t fully gauge the activity in the Dayton market — because the information is self-reported — it is reflective of the trend locally.

Local brokers said 2009 was a down year for mergers and acquisitions because of tighter lending, an uncertain economy and business owners not being able to get the dollar amount they believed their business was worth.

Last year, Hattan said he couldn’t get anything financed for business sales. To get deals going, sellers and brokers are getting creative with financing, offering seller financing and other options.

Chadwick said there is money available from a number of different sources including U.S. Small Business Administration lenders, individual investment groups and private equity groups.

Hattan said with today’s financing, it’s nearly impossible to sell a business that lost money two out of the last three years. But companies with positive revenue and profit trends are selling quick.

Jim Sachs, president of Kettering-based Battelle Capital Advisors LLC, said activity was up at the beginning of the year, but he’s recently seen a slowdown. While activity and interest remains high, it’s been tougher to bring a deal to fruition.

“There are jitters, a lot of uncertainty,” Sachs said. “It’s hard to get a deal to closure.”

There are hundreds of “business gems” in the Dayton area, Chadwick said, businesses that many people have never heard of, but are doing well. For those buyers who have the money, now may be the time to buy.