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Thursday, Jun 1, 2023

The Number

The number of businesses sold in the Los Angeles metro region rose 32.2 percent last year, according to data from BizBuySell, a website used by brokers and owners looking to sell a company. In total, 764 businesses were sold in Los Angeles and Orange counties on the website during 2017, with restaurants and service firms accounting for nearly 70 percent of the transactions. Bob House, president of BizBuySell, said demographics and economic conditions – including cheap capital – explain the increase. “Baby boomers are reaching retirement, and now’s a good time for an exit,” he said. “Businesses have grown over the last few years, and because they sell for multiples of revenue or cash flow, they are taking advantage of conditions now.” While the number of millennial-generation buyers is growing, most buyers are younger boomers in their 40s and 50s, House said. Examples of businesses sold include a carwash in Valencia that fetched $250,000, a laundromat in Canoga Park that sold for $290,000 and a Valley-based limo service that yielded $600,000. For L.A. County overall, the median price was $200,000, representing a mere 0.64 multiple of annual revenue. House advises entrepreneurs looking to sell their businesses to start preparing by putting their accounting files in order, training their staff and getting equipment in good repair. “That will help your business show well,” he said. For prospective buyers, House said to look for a business capable of improvement on the profitability metric. “You’re buying the cash flow, so you want to be confident you can generate at a minimum the same cash flow,” he explained. “But really you want to go beyond that. Look at expanded hours or more sales channels. Then look at your skill set and how involved you want to be.” Two of the year’s bestsellers are ecommerce websites and restaurants. – Joel Russell

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.

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