Larger companies go up for sale, followed by higher prices

Bigger businesses are hitting the sale block in Pittsburgh, and they're fetching a higher price, according to an online marketplace.

BizBuySell.com, which handles mostly small business transactions, said the median asking price for a Pittsburgh-area business during the final three months of 2007 was $283,034, based on 112 companies listed on its Web site during the three-month period ended Sept. 30.

During the quarter, five deals closed, representing a range of industry sectors, though BizBuySell would not name the companies. Of those five deals, median annual revenue was $850,000, and median sale price was $800,000, slightly below their median asking price.

Those local fourth-quarter numbers were above Pittsburgh's third-quarter average price of $275,534 and ahead of the national fourth-quarter average of $255,000.

BizBuySell General Manager Mike Handelsman said business valuations in Pittsburgh are higher than what he's seeing nationally. BizBuySell only began breaking out regional data in mid-2007, he said, so comparative data were limited.

National City Business Credit Managing Director Greg Steve doesn't believe BizBuySell's fourth-quarter increase signals a trend that prices are increasing.

"Unless," he said, "it's just the competitive landscape, and people are focusing more on smaller deals so they get bid up a little bit. But I think banks and mezzanine lenders are looking at the world as they always have."

But Grant Street Business Advisors President Kathy Hanula said local buyers are more interested in smaller companies than they were in the past -- particularly those looking to expand their existing business through acquisition.

"That's been an approach used for larger companies, but smaller business owners are becoming educated, and I'm getting more of these inquiries," Hanula said.

BizBuySell's figure is "in the ballpark" for very small business sales, she said.

Although her Downtown-based firm serves as a broker for companies with sales ranging from $5 million to $20 million, Hanula said a notable trend of buyers in 2007 was an increasing interest in companies with sales of less than $10 million.

Allied Business Consultants President Tony McDaniel said he "wouldn't argue" with BizBuySell's numbers, although his Franklin Park-based brokerage specializes in transactions up to $20 million.

His firm saw more deals last year than in 2006 and expects activity to increase this year.

About BizBuySell:

BizBuySell is the Internet's largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell currently has an inventory of over 48,000 businesses for sale, and more than 275,000 unique visitors each month. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry's leading franchise directories.

BizBuySell was founded in 1996 and acquired by LoopNet, Inc. in 2004. LoopNet operates the largest commercial real estate listing service online, with more than 2.2 million registered members and 920,000 unique visitors monthly. The LoopNet online marketplace contains more than $440 billion of property available for sale and 3.4 billion square feet of property available for lease.

Media Contact:

Frank Krolicki
Walker Sands Communications
office: (312) 546-4127
email: fkrolicki@walkersands.com

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