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Sales of small businesses gaining momentum in the third quarter despite uncertainty over taxes government spending and regulation.
Our next guest says that we are in a buyer's market for small businesses to -- could all change after December 31.
Mid bite sell dot com group general manager Mike handles -- joins us from San Francisco Mike thank you for joining us.
Can you give an idea of thinking -- if I get attacked the companies were talking about your your your your site was 45000.
Businesses for sale.
Businesses are the.
We really refer -- main street businesses so the majority are made up retail shops restaurants.
Service businesses smaller manufacturing businesses most or selling for under a million dollars.
-- but let's start -- just gonna ask who's buying Mike.
People that are buying are largely you know the unemployed workforce unemployment still relatively high about 8%.
And so often in our economy and past recessions when.
The larger companies can't pick up the slack to increase employment people turn entrepreneurs and in those -- the people who buy small businesses.
So it gives us an idea what I mean small business has been part of the national conversation a big part of it.
As we talk about these tax hikes approaching at the end of the year and the fiscal -- what could this do to this say well.
Of those small businesses that you're saying right now is doing quite well.
There we've seen -- certainly a slow and somewhat choppy recovery over the last two or so years since then the big recession in 2008.
The small business transaction market that we track tends to be.
Moving in the right direction in Q3 of 2012 small business transactions were up about two point 8% -- the prior year.
And we're very concerned that down if we do hit the fiscal cliff with the decreasing government spending and increase -- taxes that that's -- dramatically back.
First the help of small business which in turn on makes -- much less sellable and therefore all impact the transactions of small businesses.
Now Mike that we were just talking about cap gains and dividend taxes going up are likely to go up in 2013.
That might work in the favor of people think -- to buy small business his folks who were skittish about getting heavily putting their -- stock market might decide to take over small company.
And go and invest in long term actually own.
A company is are you hopeful what that might happen.
I think it -- the way we look at it is when small businesses thriving that's when small businesses can change hands.
-- 54% of the jobs in India are our economy or private sector jobs in this economy -- provided by small businesses.
So when small businesses are thriving they can hire people they can invest in the economy and they can also turn over and that turn over is what creates additional investment.
When people for example who were unemployed decided by -- small business -- often hire one or two new people.
-- often find ways to invest in the business and trying get it to grow and that's the cycle that -- this out of recession into more productive economic times.
So I'm not I'm a small business and I'm hearing that you're saying it's a buyer's market for these small businesses.
We'll look at I view as a small business to make myself look bad right now as we head towards the end of the year.
Well one of the challenges with selling small businesses it takes time to prepare you know we we look at the data recently to see is that that the pending fiscal cliff.
Impacting the small business market is it creating.
Environment where people are looking to sell very quickly unfortunately can't package up and sell a business in a matter of four or eight weeks in general takes six to twelve months to.
Prepare and sell a business.
For those people who were looking to -- armed it is a good market valuations are down for about 20% vs where they were in 2008.
Prior to that the recession back -- And so it's a good time the by.
The challenge really is also in -- liquidity there's not a lot of funding available for potential entrepreneurs to get access to capital to -- small businesses.
And what that means his current business owners are often having to find.
The transaction or provide financing to make the transaction happened that also is in the favor buyers right now.
Mike is state tax is likely to go up as well and might that mean sort of against your interest but might that be a lot of kids that were expecting to get property from their parents whether it's a small farmers small business whatever.
They were thinking about turning it over selling it but because of that that hike in the cap gains in the estate tax they may decide to get in the business themselves instead of selling.
It's possible you know as we look at the market at the end of this year over the last month or two we were surprised to see that there was an in.
A surge in people closing business transactions.
We still think we may see a little bit of that over the next three to four weeks as deals that are very close to closing decide actually make the deal happen so they can pay.
Similarly lower taxes and this year.
Bomb -- the other thing though is -- we have felt that.
On depending increasing taxes seems to be outweighed by the fact that -- that the broader economy.
Is having a big factor so I think people are more inclined to say don't wanna get out of this business now or not -- my gonna have to pay.
You know 5% and greater share of capital gains taxes next year or paying a slightly higher tax rate.
-- by -- dot com is the name of the company group general manager Mike -- men thank you very much and coming in appreciate it might.
Thank you are.
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