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It's a good time to be buying or selling a business even though interest rates are creeping upward — rates are still relatively low, and these days, many companies look like a better investment than the stock market does.

But whether you're on the buy or sell side, it's better to be doing a deal for your own personal or financial reasons, not only because the climate is good.

Dave Clark, who bought a marketing company called Talk Marketing in September, said of his acquisition, "it was a great cure for the unemployment that I was suffering from."

Clark had sold a previous business and gone to work for someone else. It was a bad match, he was unhappy, and he needed to do work that would be fulfilling. So he and a business partner bought the Morristown, N.J.-based company that specializes in word-of-mouth marketing techniques.

Unemployment is indeed one of the great incentives for buying or starting a business; people who are downsized with severance packages often invest the money in their own enterprises. Historically, they've done so when the economy was considered less than ideal, simply because that's when companies have tended to lay workers off.

"There's a lot of demand for small and medium-sized businesses right now," said Roger Murphy, president of Murphy Business & Financial Services Inc., a Clearwater, Fla.-based business brokerage. "A lot of people are fed up with working for someone else."

And, Mr. Murphy said, rising rates are not yet a deterrent to buying. Many business loans are set at 2.5 per cent above the prime rate, which rose to 7 per cent Tuesday when the Fed pushed its benchmark rate up 0.25 per cent. Mr. Murphy said another 1 to 2 percentage point rise in the prime will make deals look less favourable, but he said prospective owners will still be interested in buying. They do have to be sure that the company's cash flow will be enough to service their higher debt costs.

The stock market's current sideways track also makes it a good time to be buying — you're likely to find more people willing to invest in your enterprise,

"When people have millions of dollars (and the stock market is rising), they're less likely to give their nephew Johnny $100,000 (U.S.) to buy a pizza parlour," said Andy Cagnetta, president of Fort Lauderdale, Fla.-based Transworld Business Brokers. "If they can make it in the stock market, why risk it on a business?"

Savvy buyers are looking beyond the current business cycle — many, if not most, expect to own a company long-term.

Chris Palmer, of Little Rock, Ark., recently went into the home improvement business with a partner. Together they hold a Kitchen Solvers kitchen and bathroom remodelling franchise, and they also own a construction business. The fact that interest rates are rising, and an end to the housing boom is widely predicted, didn't dissuade Mr. Palmer — if people stop taking out home equity loans to fix up their houses, he and his partner hope to get business from home builders.

"That cycle's a little different than the consumers," Mr. Palmer said.

Mr. Palmer, who is 24, said this is a good time in his life to be buying a company. After serving in the U.S. Air Force, he wanted to go into business for himself. Palmer said he researched between 150 and 200 businesses before deciding to go into home improvement.

Sellers often have their own, largely personal, reasons for selling. And brokers say that's a better approach than bailing because of an economic cycle.

"You should sell your business when you have some other reason to sell — liquidating a business is not the biggest windfall event in your business career," Mr. Cagnetta said.

Sometimes, the decision to sell all or part of a company is based on what's good for the business.

Micah Portney, owner of ZEO Health, said he needs to find an equity investor or sell the business because it can't expand further without some cash. The West Nyack, N.Y.-based company sells a dietary supplement called Esdifan on the Internet and in some drugstore chains, but Mr. Portney said it can't advertise adequately or widen its distribution network without outside cash.

"It has to get funding and move to the next level, or I need to sell the company or I need to bring it back to [being] a smaller company — but who wants to do that?" he said.

Mr. Portney acknowledged that selling might mean he will leave ZEO Health. He sounds philosophical about that possibility.

"If I have enough money to pay my bills and get myself in a good position, that'll be what I consider a success," he said.