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In the midst of souring economic prospects and a poor buyout market for the city's largest companies, the sale of small businesses is booming, according to new industry data from the nation's largest online business broker, BizBuySell LLC.

Anecdotally, business brokers said sellers' interest is reaching its highest levels in years.

While that interest doesn't surpass other weaker metro economies nationwide, the figures show the beginnings of an economic shift for the city's smallest entrepreneurs.

Atlanta first-quarter listings of businesses for sale on BizBuySell's Web site have tripled within the last year from 371 to 969, while sales of businesses have increased 96 percent, from 29 to 57.

That growth is outstripped by BizBuySell's national data over the same period.

Across the U.S., BizBuySell reported a 66 percent increase in closed deals, from 1,081 in the first quarter of 2007 to 1,796 during the same period in 2008. National listings on the site quadrupled.

Unlike major corporate transactions with recognizable brand names, small-business sales typically fly under the radar, even though deals involve businesses consumers use every day.

Small businesses are typically bought by individuals, rather than private equity firms or strategic competitors, brokers said.

BizBuySell's first-quarter local deals include sales of Atlanta gas stations, dry cleaners, bars, restaurants, landscapers and small manufacturers.

"There's been a surge in sellers," said Mike Handelsman, general manager of BizBuySell.

The transactions don't garner the enormous price tags of buyouts by corporate giants. BizBuySell's average Atlanta sale in the first quarter of 2008 was only $145,000.

But small businesses are the driver of Atlanta, and Georgia's, economy, according to the Small Business Administration. The federal agency's 2007 state report estimates the state has 859,500 small businesses, with roughly one-quarter of those, 213,000, employing more than one individual.

Atlanta alone has 106,000 small businesses, according to the SBA's company criteria, and small business employs nearly half of the state's non-farm workforce.

A host of factors are driving local small-business owners to look to sell, brokers said.

Some are concerned about the economy, which has weakened significantly over the past year.

"Small business always trails Wall Street, and Wall Street is clearly having problems," said Don Bravaldo, principal at Walden Businesses Inc., an Atlanta business broker. "Things are good now, but in six months even this market will have problems."

Bravaldo said he's advising potential sellers the market won't be strengthening in the next year.

Others are concerned about their particular industry.

Ed Reel, principal at Summit Acquisitions Group LLC, said his clients whose businesses rely on discretionary spending -- already impacted by the economy's woes -- or those fighting higher energy prices, like transportation companies, are pushing to sell.

"These businesses are going concerns -- some are still barely making money -- but you have owners not interested in trying to fight through what everyone thinks is the coming down cycle," he said.

Reel said he has "all the clients he can handle", and more are calling for his firm's services to sell.

The new glut of sellers has begun to depress prices.

Like their bigger counterparts, some brokers are already reporting that the asking price some small businesses have isn't being met by buyers.

BizBuySell's data shows that the gap between the local asking price and the actual sales price closed in the first quarter of 2008, compared with the first quarter of 2007, showing that sellers are beginning to ask for less and are still getting less for their businesses.

Brokers said it was driven in part by sellers simply asking for less.

An Atlanta small business sales price of $145,000 in the first quarter is only 18 percent less than the initial, average asking price of $179,000 in the same period last year. In the first quarter of 2007, sales and asking prices differed by 25 percent on average, from $240,000 asks to $180,000 for the actual sale.

"It's like real estate, you can ask whatever you want, but it doesn't mean you'll get that price," said Reel, who noted his clients are generally getting offers 8 percent to 10 percent below their initial asking price.

But it can vary by industry.

Any companies tied to the housing market are largely unable to sell.

Bravaldo said he's marketing one building supplies distribution company that could have sold for $5 million last year.

This year, he expects the business will garner half that because "the home market is just being avoided entirely."

Copyright © 2008. Atlanta Business Chronicle.