Prices up for furniture business sales

But trend is expected to change

Brian Carroll -- Furniture Today, December 11, 2008

SAN FRANCISCO — Data released by BizBuySell.com, an online business-for-sale marketplace, indicate that valuations of furniture businesses have been on the rise despite the recession.

That trend is expected to change, however, as the fiscal crisis continues and constricts the supply of cash.

The new information from BizBuySell offers a snapshot of the home furnishings economy just as Wall Street began imploding.

In the third quarter, the online marketplace facilitated the sales of a dozen home furniture and furnishing businesses, ranging from a furniture manufacturer to a frame gallery. The median sale price of those sales was $305,000, or more than double third quarter 2007's median sales price in furniture of $132,500.

The median annual revenue for the furnishings businesses sold in 2008's third quarter sales was $492,000, up from $446,000 a year earlier.

With more unemployed and self-employed people looking for businesses to own, valuations have edged up, but Mike Handelsman, general manager of BizBuySell, said he expects that to change soon. "We should see a dramatic dip in Q4. We'll see a lot more distressed sellers at a time when financing has become much more difficult," he said.

For the dozen third-quarter furniture business transactions, the sale price averaged 94% of the asking price, the highest of the last four quarters and a figure that Handelsman described as "quite strong." For all of the online marketplace's business categories, sale prices ranged from 85% to 95% of asking price. But this benchmark, too, is expected to drop.

"Sellers will want out, but with money, not a note," he said. "This puts pressure on the seller."

BizBuySell home furnishing data are based on actual sales as reported by business brokers, not on the for-sale listings.

To facilitate business sales, BizBuySell offers potential sellers its online valuation report, which was developed to help value a business. The company says that valuations are based on nearly 32,000 sold comparables and 50,000 for-sale listings on the site, and pricing reports start at $20.