This may be the year to buy a business

Looming threats of a recession and the recent interest rate cut are generating optimism among the brokers of small businesses and the lenders who finance such deals.

"One of the things that will have a very real affect on my work is the cutting of interest rates," said Linda J. Purcell of Purcell Associates LLC in Palatine, at the annual conference of the Midwest Business Brokers and Intermediaries in Rosemont this week. "It makes it much more favorable to a buyer to obtain loans on profitable companies."

The annual conference, at the Holiday Inn Express, comes on the heels of a recent survey released by the International Business Brokers Association concluding 2008 would be a buyer's market in small-business transfers.

But that doesn't mean there won't be sellers.

"A good company is a good company," said Anthony Contaldo, an investment banker with Corporate Finance Associates in West Dundee. "They're going to sell regardless of the economic conditions around them."

Contaldo works with businesses in the $1 million-to-$50 million range and in industries as diverse as technology and metal fabrication.

"When you get into a recession or downturn, there's a shortage of quality companies to buy, so they're even more in demand," he said. "'08 is looking like it's going to be our best year in history."

Current economic conditions nevertheless raised concerns.

Thomas Meyer, vice president of SBA lending at Comerica Bank in Barrington, said the biggest effect the slowdown will have on his business is potential small-business buyers will not be as able to tap into equity in their homes to finance a transaction.

"That aspect scares me," he said. "The interest rates don't really scare me at all."

"As long as we continue to be aggressive on lending, it'll bode well for us," Meyer continued.

John Brooks, a business broker with Illiana Properties in Hutsonville, is concerned about just that, whether lenders will be aggressive.

"It's a good time to borrow money, if you can get it," he said.

Veterans of the business offered perspective.

"If you've been around long enough, you know it's a cycle," said Judy Feldhausen, a "coach" for potential small business buyers. "Why not get on the train when it's moving slow, rather than trying to catch up with a train that's pulling out of the station?"