ART OF THE DEAL JOB OF A BUSINESS BROKER SHROUDED IN SECRECY, YET INTEGRAL TO SUCCESSFUL TRANSACTIONS.

Byline: Brent Hopkins Staff Writer

CANOGA PARK - Sworn to secrecy, they labor away at night, subtly massaging million-dollar deals while pretending it's all business as usual.

Though business brokers, the middlemen in business sales, may not spend much time in the limelight, they're an integral part of the transaction process, analysts say. And the unusual nature of their jobs leads to some interesting situations, requiring extreme discretion.

``I don't know of any business worth its salt that doesn't want to keep it a secret when it goes up for sale,'' said business broker Joe Goldberg. ``In the sale of a residence, you put up a sign to tell the whole world. We can't do that.''

Fearing the loss of customers and employees, as well as vulnerability to competitors, owners looking to sell their businesses often contact Goldberg and his associates in Sunbelt Business Brokers to handle the process discretely. Their company Web site currently offers a listing of 77 businesses, three-quarters of which are located in the San Fernando Valley. With rocky economics, these could become hot commodities for victims of corporate downsizing, analysts said.

``If we see some layoffs, those people often decide to go into business instead of getting a new job,'' said Roberto Barragan, president of the Valley Economic Development Center.

From the brokers' point of view, a shaky economy can translate into a rush of potential clients.

``Any shift in the economy creates an opportunity in business,'' said Massoud Javadizadeh, vice president of Sunbelt.

Goldberg agreed, pointing to the constant need for services, regardless of economic conditions.

``If times are bad, many businesses succeed,'' he said. ``If times are good, though, they're still around, too.''

Part of a national network of 230 offices, Goldberg and Javadizadeh offer their services to owners looking to divest themselves of their companies. In return for a 10 percent fee, their staff of five brokers finds clients interested and capable of taking the helm. After locating prospective buyers, they assist in the mountains of paperwork that accompany a sale. This streamlines the process, which averages six months in length, Javadizadeh said.

``You could sell a business by yourself if you wanted to,'' he said from his office. ``But you need a middleman to handle the details.''

The first major detail is the offering price, determined by a complicated rubric that varies with each industry. While an ice cream shop could be priced at five times its monthly gross sales, plus inventory, a video sales/rental company's price would be roughly based on its annual net profit plus $25 per tape in its inventory, according to the Sunbelt rules of thumb.

Once armed with a price, brokers float offers to buyers who they think will be able to successfully take over. After an offer is made, the seller undergoes a period of due diligence, where the buyer ensures that the business is truly how it was advertised. If all steps are successfully completed, a business can change hands extremely rapidly.

``We've been successful in selling a San Fernando Valley pharmacy in five days,'' Javadizadeh said.

In addition to this speedily turned-around sale, the West Park Pharmacy, Sunbelt has also engineered the recent sales of the popular Nico's Family Restaurant in Canoga Park, Pampas Restaurant in Encino, Capri Pharmacy in Tarzana and the Web site design firm EiNetCo in Studio City. Goldberg estimated that the firm's listings could soon grow to as many as 150 listings in six months. This bodes well for the Valley, Barragan said. If the companies are sold and continue under new leadership, small businesses can remain a vital part of the local economy.

``It's a good thing because it keeps the business going, and it doesn't have to shut down,'' he said. ``If you can buy a store that has some success, then you have a good chance of making it.''

With this in mind, brokers prefer listing firms that are already profitable, though Goldberg noted that exceptions can be made for businesses that could be easily fixed up.

``Basically, we seek out companies who are making money,'' he said.

That was the case for Internet impresario Billy Carmen, founder of EiNetCo. What began as a side project to develop Web pages grew by leaps and bounds after enlisting clients such as Sony Pictures and Variety.

``With the phenomenal success of Web sites and the phenomenal failures, as well, we managed to turn it into a full-time biz,'' Carmen said. ``It started placing demands on us that we could not meet.''

Faced with this added burden, Carmen decided to sell his firm, which employed a flexible staff of up to 14 for big projects. Rather than go at it himself, he decided to try a broker. After signing on with Goldberg, he sold EiNetCo in under two months.

``My head was spinning,'' he said. ``I never imagined it would be that easy to sell, because it was not a big company.''

Carmen attributed the smooth sale Sunbelt's negotiating know-how.

``They managed to pull the sale off without a hitch,'' he said. ``Since I hadn't been in the position and not knowing all the ins and outs, they held our hands all the way.''

With big companies, from Montgomery Ward to Southern California Edison, announcing layoffs by the day, more and more workers may find themselves like Carmen, looking to get into their own personal line of work.

``In small business, you can control your own destiny,'' Goldberg said. ``That's the backbone of this country, so small business is where it's at.''

ON THE MARKET

Last year was an active one for small business transactions. California Businesses for Sale magazine reported 17,828 sales in 2000, the second highest total in the past five years. Sales are typically handled by a broker, such as Sunbelt Business Brokers, which had among its sales the following:

--EiNetCo, Studio City

The Web site development firm has attracted large clients such as Sony Pictures and Variety.

--Nico's Family Restaurant, Canoga Park

Sunbelt brokered the December sale of the popular Greek-American eatery, whose longtime customers praise the cuisine as ``best in the country.''

--West Park Pharmacy, Canoga Park

Sold in five days to a husband-and-wife pharmacist team, the pharmacy has served the area for four years.

CAPTION(S):

photo, box

Photo:

(color) Joseph Goldberg, left, and Massoud Javadizadeh arrange sales of dozens of businesses at Sunbelt Business Brokers.

Evan Yee/Staff Photographer

Box: ON THE MARKET (See text)