A lot of the economic news these days seems depressing, but there is at least one reason to remain optimistic: It's still a great time to sell your business.

Sure, the downturn in the housing market and the resulting credit crunch are expected to dampen the number of billion-dollar deals led by private equity firms. But investment capital as a whole aimed at the middle market -- consisting of companies with less than $500 million in annual revenue -- remains plentiful. Venture capital firms alone raised about $34.7 billion in 2007, more than in 2006, according to the National Venture Capital Association. New hedge funds raised some $31.5 billion, according to MarketWatch. For those and other investors, the question is how to put all that money to work.

The answer just might be your company. To get a sense of where the market is headed these days, Inc. has partnered, for the fifth straight year, with Portland, Oregon-based Business Valuation Resources, a leading provider of data about private company transactions. The graphics, tables, and work sheet on the pages that follow are based on 3,838 transactions completed from January 1, 2004, to December 31, 2007, in 141 industries. (You'll find even more industry data here.) Meanwhile, we also talked to dozens of business brokers, mergers and acquisitions experts, and valuation specialists about opportunities for small-business owners.

These experts are an optimistic bunch. One encouraging sign for sellers, they say, is that a whole new group of buyers -- international companies -- has begun kicking the tires on potential investments here, seeking to take advantage of the weak dollar and gain entry to the vast U.S. market. "The weak dollar means anything related to exports would be attractive," says David Williams, a national leader of advisory services for Deloitte Financial Advisory Services in New York City. Len Russek, who heads the international M&A division at the Murphy Business & Financial Corporation in Clearwater, Florida, expects international buyers to snatch up suppliers of construction equipment and materials.

Supply and Demand

Meanwhile, cost cutting and downsizing in corporate America always lead to an uptick in entrepreneurship. Many of those corporate refugees will become consultants or start businesses from scratch. But others will be looking to buy into something established. (See "Meet the Buyers".) Yet although potential buyers and sources of investment have remained plentiful, the number of quality businesses on the market has not, says Rose Stabler, managing partner of Certified Business Brokers in Houston. "There aren't enough listings out there to satisfy the hunger for established, profitable businesses," she says. When you combine this shortage with all that pent-up money waiting to be invested, what you wind up with is a seller's market. And that means ample multiples and prices, particularly for companies in hot growth sectors. The hottest ones include:

Technology and software. If you make hardware such as semiconductors, storage devices, and circuit boards, or if you offer custom programming services, you can expect to sell your company for two to six times revenue.

Energy. Petroleum products, oil and gas drilling, and related services are hot. Even untested, largely speculative businesses attempting to drive the next wave of clean energy can garner big multiples.

Anything aimed at the aging U.S. population. Pharmaceuticals, orthopedics, and skilled-nursing staffing and facilities all are increasing in popularity among investors. "While buyers may look at a company's past performance, they are also buying for the future," says Ken Oppeltz, principal at VR Business Brokers in San Diego. "That means they'll be willing to pay higher multiples in markets that serve the baby boomers."

You can expect other sectors to begin cooling off. In recent years, for example, there have been plenty of deals for residential construction firms and suppliers of items like cabinets and floor coverings. But the weakening housing market will make those companies risky propositions, says Ron Johnson, president of ABI Business Sales & Mergers in San Ramon, California. "Those businesses might be hard to sell -- it's hard to find any with profits," he says. On the other hand, these struggles could spark a wave of consolidation, especially among small and midsize companies looking for scale, says Jeff Snell, a broker at Enlign Business Brokers in Raleigh, North Carolina. "When markets get tight, business owners look at each other and say, 'Maybe we should join together rather than fight,' " he says.

The Boomer Effect

Just as in selling a house, selling a business requires a good sense of timing -- everyone wants to sell when the market is at its peak. And if potential sellers need yet another reason to take the plunge, consider this: An estimated 65 percent to 75 percent of the small companies in the U.S. -- some 10 million -- will likely hang up a "for sale" sign over the next five to 10 years. Why? Retiring baby boomers. "While it has historically been a seller's market, we're on the cusp of shifting into a buyer's market," says Stabler. "The children of the baby boomers have moved on to other things, so with no one to pass the business to, they have no choice but to sell." The likely result? An oversupply of businesses for sale -- and an end to the current seller's market. In other words, use the following pages as a guide to what you might expect to sell your business for today, but maybe not tomorrow.