Used to be a small business owner who was getting ready to retire sold off his inventory and locked the door behind him. But just as it has in so many other areas, the Internet has created a thriving marketplace for the buying and selling of small businesses. “Over the last three years in California there’s been a 10 percent to 15 percent increase in the sale of small businesses,” said Peter Siegel, founder and owner of BizBen.com, one of the earliest Web sites for the sale of small businesses. Siegel noted that the improved economy has played a role as have demographics as more baby boomers reach retirement age, there are more businesses being offered for sale. But just as important, those who want to sell businesses, and those who want to buy them, have found a far more efficient tool in the Internet than they have ever had before. BizBen, which began as a publication and evolved into a Web site about seven or eight years ago, shared the space with only two or three Web sites when it began its foray onto the Internet. Since then, brokers and others estimate that there are now about 20 Internet sites for the acquisition and disposition of small businesses, about half of them used consistently by buyers and sellers. San Ramon-based BizBen currently has about 5,800 active business listings, up from 2,500 five years ago. Until these sites emerged, small businesses, often under $5 million in sales, had few options to market their businesses. They could sell to a family member or friend or they could advertise in local newspapers that charged high fees and allowed only limited descriptions of the company for sale. An ad that read something like, “Restaurant for sale. Profitable,” could cost a couple hundred dollars. With the Internet, these same businesses can offer far more information at much lower cost. “We have close to 200 listings, and with the amount of information we put out, if we had to put it in the Sunday Los Angeles Times or the Daily News we would probably have to invest in excess of $10,000 a month,” said Massoud Javadizadeh, who, with his partner Joseph Goldberg, co-owns Sunbelt of California, business brokers in Tarzana. Although the transactions tend to be small, many are handled by business brokers who oversee everything from the marketing, to the business valuation, buyer screening, the escrow details and the sale. Along with the opportunity to find a market for a small business, the Internet has also provided opportunities for business brokers. “Five or seven years ago, about 15 percent of deals involved a broker,” said Matt Coletta, whose company, Certified Business Advisors, is based in Calabasas. “Now it’s triple that. The industry has become more recognized through the Internet.” Some years ago, residential real estate brokers were hired to handle the buying and selling of small businesses. They used the market’s multiple listing service to attract buyers, but they had little knowledge when it came to such things as valuing the business, business brokers say. Since then, a new field of business brokers, which, for reasons no one quite understands, are still licensed by the state’s Dept. of Real Estate, has emerged with an expertise better suited to the transaction. “There are still very few business brokers because of the complexity,” said Javadizadeh. “Although I think because of the Internet the competition is growing, but it is still at its infancy.” Although the California Association of Business Brokers offers a certification for business brokers, most of the brokers say they learned their trade through experience. Some have been business owners, were involved with the SBA’s SCORE program or come from a financial advisor background. Brokers say that the availability of these sites allows them to market to a much wider pool of sellers far more efficiently. “I just recently had someone from Capetown South Africa contact me for a business I had for sale in Van Nuys,” said Coletta. “Right now the majority of buyers finding businesses are finding them through the Internet. That’s the primary benefit is finding buyers. As far as finding sellers, a percentage of deals that we get do come from sellers searching various web sites, but the majority of our business really comes from referrals.” Although the Internet has made it easier to market a business, buying one is still challenging. Some brokers say that Small Business Administration loans are helpful in financing these sales. The SBA in theory offers financing up to 80 percent of the purchase price. But others believe that the nature of these businesses makes it difficult to secure SBA financing. “I consider the SBA worthless in buying a business,” said Willard Michlin, a business broker and financial consultant who runs Kismet Business Brokers in Moorpark. “The problem is very small businesses never have a financial set of books that’s good enough that the SBA will give them a loan.” Small business owners often write off so many of their expenses that their business appears to be unprofitable, and collecting the necessary documentation to argue the case with an SBA lender is too difficult and time consuming. In recent years, many businesses were acquired using home equity loans, and in some cases, sellers also finance the transaction. That may be changing as more baby boomers put their businesses up for sale and financial companies see opportunities in these transactions. “We’re seeing aging ownership, and that’s going to be the focus of our revolving loan fund,” said Roberto Barragan, president of the Valley Economic Development Center. The VEDC has been waiting for changes in federal regulations to allow the agency to use a $6 million revolving loan fund originally provided to assist with redevelopment following the Northridge Earthquake. Once those changes are implemented and the agency is allowed to use the funding for unrestricted lending, the VEDC plans to focus on funding those who want to buy existing businesses. “Business owners particularly in the Valley are looking to sell,” Barragan said. “We’re going to focus on providing financing to buyers, particularly for existing managers and employees of the business.”