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Frontier -- Keeping Score

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Yes, you can even buy small companies on the Web. But just because you can...

Bill Hill has a deal for you. The 67-year-old Las Vegas resident wants to retire, but first needs to sell his business installing water-filtering devices. "It's a great opportunity," he says. "You could triple this business in a few years." Interested? Then log onto eBay. Hill tried a classified ad, but did not get much of a response. So, seeking national exposure, he decided to try the popular Internet auctioneer. The bidding begins at $100,000.

It's not just Hill. In March, eBay Inc. launched its "Business Exchange" as a venue for entrepreneurs to buy and sell supplies and equipment. But entire businesses have begun to show up on the auction block: an antiques store near Hannibal, Mo. ($75,000); an excavating business in the Rocky Mountain foothills ($250,000); a resort lodge in Costa Rica ($350,000). Would anyone actually bid on a small business, sight unseen? It does happen. A country store in Georgia and a family business in New England have changed hands, says Kevin Pursglove, spokesman for the San Jose (Calif.) company. (eBay does not keep records of individual deals, and Pursglove did not provide details.) "But it hasn't happened a whole hell of a lot," he says.

Old-fashioned business brokers are aghast. "Do you have any idea how many deals fall apart after you look at the financials?" asks Stephen Dahl, owner of Lauren Dahl & Associates, a 42-year-old small-business brokerage in Beverly Hills, Calif. "You would be nuts to buy a business this way." But Hill and other would-be sellers say they're just looking for a bargain. In exchange for linking buyers and sellers and performing some due-diligence work, most brokers collect a fee of about 10% of a business' sale price. That's a healthy chunk of change, especially for an entrepreneur. "What can a broker do that I can't do?" asks Hill. Depending on what kind of business is being sold, eBay charges $50 or a fee of 1.25%-5% of the sale price.

Unlike offers for other items on eBay, bids for small businesses are not binding. Few sellers post financial details, and most admit that the postings amount to little more than free advertising. "I thought I could get someone to come out here and look," says George Vandeveer, 56, who listed his Grand Junction (Colo.) excavating company on eBay. Vandeveer hopes to use the proceeds to launch a buffaloraising business in Nebraska.

Alas, Vandeveer's buffalo dreams may have to wait. During the seven-day cycle his business ran on eBay, the posting attracted only scant inquiries and no actual bids. It's pretty much the same story for other small businesses. Still, folks like Vandeveer may be on to something. Another Web site, Salt Lake City-based BizQuest.com, has begun linking buyers and sellers and boasts a database of 15,000 small companies for sale. Unlike eBay, it's not an auction and buyers perform their own due diligence. Interest, says spokeswoman Azurdee Veigal, has been growing. Let the bidding begin.Learn how to sell the old-fashioned way. Click Online Extras at frontier.businessweek.comBy Benjamin Mark ColeReturn to top

TABLE

Caveat Emptor

A sampling of businesses recently listed for sale on eBay

FINANCIAL

LIQUOR SOFTWARE BASEBALL

STORE FIRM TEAM

LOCATION LOCATION LOCATION

Wyoming Mid-Atlantic Coast Bellingham, Wash.

ASKING PRICE ASKING PRICE ASKING PRICE

$650,000 $2.5 million $200,000

DETAILS DETAILS DETAILS

Full liquor license; $10 million in 1999 Bellingham Bells

"restaurant, bar may sales; "with proper "minor league type

be added at owner's funding $15 to $50 baseball club"

discretion" million is possible"

AUDIO BOOK TOURIST MOVIE

PUBLISHER LODGE/HOTEL THEATER

LOCATION LOCATION LOCATION

Los Angeles Costa Rica Texas panhandle

ASKING PRICE ASKING PRICE ASKING PRICE

$850,000 $350,000 $15,000

DETAILS DETAILS DETAILS

Grammy-award win- 10 acres; Built in 1950; "The

ner; "revenues run "ultimate jungle kids in town will

from mid to high six & bay views" bring you a lot of

figures" business"

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