Wood Industry Sees Spike in Business For Sale Deals

Jo-Ann Kaiser | Posted: 04/29/2013 12:35PM

 

click image to zoom Small business sales jumped dramatically in the first quarter 2013, up 56 percent compared with the same time the previous year, according to BizBuySell.com’s First Quarter 2013 Insight Report.

The study aggregates business-for-sale transactions reported by participating business brokers from around the country.

What’s behind the new figures and will it have an impact on wood products related companies? Woodworking Network reported some recent transactions including the sale to International Forest Products (Interfor) of Rayonier's Wood Products Business in the southern United States. The acquisition, finalized March 1, includes Rayonier's three sawmills located in central Georgia with a combined annual capacity of 360 million board feet.

In late January Interfor announced its intention to purchase Rayonier's Wood Products Business for $80 million. Interfor also agreed to hire all of the current employees as part of the transaction. BizBuySell.com also provided a chart of small wood products company transactions.

BizBuySell.com, a leading internet business-for-sale marketplace, said the first quarter sales number reflects 1,897 closed transactions, “a dramatic bump over the 1,218 recorded in the same period of 2012,” and the highest number of businesses sold in a quarter since the second quarter of 2008. The jump is the largest increase since small business sales bottomed out in mid-2008, adds BizBuySell.com.

BizBuySell.com says the spike in small business sales can be attributed to a number of factors, including improving small business financials for the past few years.

“Business owners who have been looking to exit their business, particularly baby boomers ready to retire, finally have their businesses in sellable shape and are more confident that they will receive an appropriate financial return on their sale.” In the first quarter of 2013, the median sales price of a sold business was 180,000, the highest level since 2009.

Other factors, say BizBuySell.com include: an increase in the number of interested buyers and owners looking to sell; strong business transaction fundamentals; a latent supply of owners ready to sell; recovering stock portfolios; and a slowly improving lending situation.

The end of 2012 saw a rush by owners to complete sale of their businesses before the potential Fiscal Cliff and new tax rates. BizBuySell.com data showed that during the final three weeks of December, “small business sales climbed 43.4 percent over the same period in 2011. It is likely that many additional such deals carried over to the first quarter of 2013.”

Curtis Kroeker, Group General Manager of BizBuySell.com added that a strong stock market helped buyers and sellers to feel ready to re-enter the business-for-sale market along with the resolution of the uncertainty of the Presidential election and to a large degree the resolution of the Fiscal Cliff. Small business financials across the country have also been a factor.

According to the Insight data, the median cash flow of a small business sold in the first quarter 2013 was $100,000, a 20.45 percent increase over the same time in 2012. Median asking price for businesses sold in the first quarter was $199,000, a 10.6 percent increase over the same period in 2012; the median sale price was up 20 percent year-over-year in the first quarter of 2013 to $180,000 to a level not seen since the fourth quarter of 2009, notes BizBuySell.com.

While the news is encouraging, business brokers participating in a survey by BizBuySell.com in early 2013 reported the factors some worried might hinder the economic recovery included the national debt, ongoing political gridlock, small business and personal tax rates, small business health care costs and ongoing long-term unemployment.


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