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BizBuySell.com Reports Increasing Business-For-Sale Transactions, Lower Valuations in 2011

BizBuySell
January 4, 2012

BizBuySell's annual year-end report finds more small businesses were sold in 2011 than in 2010, spurred by slightly decreased valuations, improved business performance, and slow improvement in capital access.

San Francisco, CA - January 4, 2012 -- BizBuySell.com, the Internet's largest marketplace for buying or selling a small business, today released its Full-Year and Fourth Quarter 2011 Insight Report on business succession trends. The report, which aggregates business for sale transaction data provided by participating business brokers, shows that small business sales were up slightly in 2011. This continues a trend of gradual year-over-year growth that began at the beginning of 2009.

For 2011, the number of small businesses reported as sold to BizBuySell.com across the U.S. was 6,703, an increase of 3.3 percent over the 2010 total of 6,486.* This follows a similar 3.0 percent jump in closed transactions from 2009 to 2010 (see following graph for quarter-by-quarter sales).

2011 Q3 Closed Small Business Transactions

The slight rise in closed transactions was accompanied by an equivalent 3.3 percent increase in the median selling price, from $150,000 in 2010 to $155,000 in 2011. However, median revenue for sold businesses was up more (6.7 percent) indicating that improved business performance contributed to increased sales activity. This also shows that business owners are adjusting their pricing expectations and selling their businesses for less relative to revenue and cash flow to get deals done.

"While 2011 continued to be a tough year for the nation's small business owners, we were pleased to see that business performance is improving and more people are buying small businesses," Mike Handelsman, group general manager of BizBuySell.com and BizQuest.com said. "Helping this is the fact that business sellers are adjusting their value expectations, something that should continue to spur deals in 2012."

Buyers Getting More for their Money

Transactions reported to BizBuySell.com showed that buyers are getting more for their money and that favorable market conditions continue to exist for buyers who have or can secure necessary funding. The average revenue multiple for small businesses sold in 2011 was .60, down 8.8 percent vs. 2010 and the average cash flow multiple was 2.36, down 8.2 percent (see following graph for average valuation multiples by quarter).

2011 Q3 Small Business Sale Price Multiples

Fourth Quarter of 2011 in Line with Annual Trends

The final quarter of 2011 showed similar results to the full year. Closed transactions were basically unchanged, from 1,699 in Q4 2010 to 1,696 in Q4 2011. This is encouraging, as the fourth quarter of 2010 saw increased selling activity due to the expected end of the reduced capital gains tax rates that were set to expire at the end of 2010 (note: late in Q4 2010, the reduced tax rates were extended until the end of 2012). In Q4 2011, businesses sold for a multiple of revenue of .60, down 8.6 percent vs. Q4 2010, while the multiple of cash flow was 2.39, down 2.3 percent. Meanwhile, the median asking price in Q4 2011 for small businesses sold dropped $5,000 year-over-year to $175,000 (see following graph for median asking and selling prices by quarter).

2011 Q3 Small Business Sale Price vs. Asking Price

"We are seeing improved small business transaction activity driven, at least in part, by the fact that small business owners are lowering prices to attract buyers," says Handelsman. "It's slowly becoming a better time to be a seller, but it's already a good time to be a buyer."

Continued Gradual Growth Expected

Fundamentals point to a continued slow, but-steady, growth in the business-for-sale market in 2012 barring unforeseen global economic issues. Small business performance is improving and sellers who haven't been able to sell for the past few years should start to reach performance levels that make a sale possible. Added to this is the fact that sellers are becoming increasingly realistic about valuations to more aggressively seek a sale. Finally, underlying all of this is the very favorable long-term conditions of latent supply (e.g., the large number of U.S. baby boomers reaching retirement age) and demand that will continue to fuel transaction growth, especially as credit restrictions ease.

"The Federal Government and Small Business Association are continuing to focus on helping ease bank lending restrictions and providing more capital to the small business market," Handelsman said. "As more buyers and sellers begin to take advantage of these initiatives, we expect the gradual increase in business transactions to continue in 2012."

* Note: Data collection methodology changed in Q3 2011. To enable historical transaction volume comparisons, BizBuySell calculated adjusted historical figures that account for methodology revisions. For further explanation, please contact the media contact listed below.

Media Contact:

Bobby Chilver
Walker Sands Communications
office: (312) 546-4712
email: robert.chilver@walkersands.com


Appendix: Additional Sales Statistics - National, by Sector, and by Geographic Market

2011 Q3 Key Financials for Sold Small Businesses

2011 Q3 Small Business Sales by Sector

Members of the Media

Let us serve as expert sources for you on buying a business, selling a business, valuing a business and small business trends. Email us here or call Bob House at 415-284-4380


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Closed Small Business Transaction Metrics by Sector for the Full-Year 2013

Key metrics from transactions reported on BizBuySell.com by sector during 2013

BizBuySell.com
Time Period:
2013
 
Source:
BizBuySell.com
Sector Sub-Sector Number of Reported Sales Median Sales Price Median Asking Price Sales to Asking Price (average) Median Revenue Revenue Multiple (average) Median Cash Flow Cash Flow Multiple (average)
Communications Communications 9 $250,000 $350,000 0.87 $1,488,862 0.47 $180,000 1.99
Construction Construction-Building 15 $500,000 $550,000 0.95 $1,207,707 0.50 $228,843 2.16
Construction-Heavy 6 $2,100,000 $2,500,000 0.92 $2,800,000 0.71 $1,000,000 2.92
Construction-Special Trades 66 $356,000 $424,500 0.95 $884,344 0.50 $174,474 2.17
Electric, Gas, Water, Sanitary Svcs Electric, Gas, Water, Sanitary Svcs 9 $525,000 $525,000 0.90 $456,748 0.84 $169,700 2.83
Internet Business Services (B2B) 45 $260,000 $285,000 0.87 $301,210 0.99 $104,500 2.37
Consumer Services (B2C) 75 $240,000 $240,000 0.92 $359,965 0.85 $89,000 2.42
Domain Name/Basic Site 21 $180,000 $195,000 0.92 $150,000 1.40 $80,000 2.40
General Internet 2 $574,995 $574,995 1.00 $479,500 1.97 $248,000 3.02
Software 13 $434,000 $500,000 0.73 $484,623 1.10 $353,000 1.57
Web Design/Tech Services 10 $687,500 $700,000 0.83 $550,065 0.96 $308,529 2.56
Manufacturing Apparel & finished fabrics 9 $205,000 $249,950 0.73 $717,638 0.37 $103,000 2.38
Chemicals & Allied Products 3 $1,825,000 $2,325,000 0.89 $1,257,418 1.11 $322,062 4.13
Electronic & Electrical Equip. 17 $550,000 $625,000 0.89 $1,522,234 0.54 $229,000 2.53
Fabricated Metal Products 57 $725,000 $725,000 0.95 $1,275,000 0.84 $280,000 3.56
Food and Kindred Products 37 $395,000 $575,000 0.89 $674,583 0.55 $122,150 3.14
Furniture and Fixtures 14 $265,000 $299,900 0.92 $917,448 0.48 $133,000 2.55
Industrial & Comm. Machinery 5 $820,000 $1,217,000 0.73 $1,830,088 0.51 $337,596 2.21
Lumber and Wood Products 13 $1,175,000 $1,250,000 0.96 $2,000,000 0.37 $420,000 2.59
Measuring & Analyzing Instr. 5 $234,000 $245,000 0.82 $150,000 1.22 $86,101 3.57
Miscellaneous 47 $415,000 $450,000 0.90 $620,057 0.74 $161,000 2.97
Paper & Allied Products 2 $100,000 $100,000 1.00 $64,785 1.54 $24,000 4.17
Primary Metal Industries 15 $525,000 $640,000 0.91 $1,056,122 0.77 $215,869 2.97
Printing, Publishing 51 $300,000 $320,000 0.89 $450,000 0.62 $114,671 2.49
Rubber and Plastic Products 13 $355,000 $595,000 0.91 $900,000 0.95 $136,333 3.04
Stone, Clay, Glass, Concrete 6 $599,500 $637,500 0.94 $835,465 0.80 $188,000 3.21
Textile Mill Products 1 $88,000 $150,000 0.59 $720,547 0.12 $51,453 1.71
Transportation Equipment 4 $1,700,000 $1,700,000 0.96 $3,600,000 0.52 $540,000 2.32
Retail Apparel and Accessory Stores 86 $160,000 $165,000 0.92 $400,087 0.48 $85,000 2.32
Automotive Dealers 34 $750,000 $785,000 0.93 $1,806,651 0.38 $247,500 2.56
Bars/Taverns 304 $195,000 $210,000 0.88 $500,000 0.46 $86,414 2.36
Blding Mat., Hardware, Garden 26 $425,923 $474,898 0.96 $789,262 0.51 $159,318 2.57
Convenience Stores 350 $175,000 $195,000 0.90 $595,000 0.37 $104,172 2.10
Florists 37 $95,590 $104,500 0.95 $335,277 0.32 $60,000 1.96
Gasoline Service Stations 306 $252,500 $275,000 0.98 $568,656 0.62 $149,586 2.73
General Merchandise Stores 35 $124,500 $125,000 0.85 $392,500 0.52 $90,600 2.17
Home Furniture & Furnishings 43 $173,000 $200,000 0.89 $437,991 0.47 $94,320 2.06
Liquor Stores 271 $270,000 $289,000 0.90 $800,000 0.41 $125,000 2.58
Marine Dealers & Equipment 6 $450,000 $495,000 0.92 $4,255,795 0.25 $242,129 2.07
Miscellaneous Retail 208 $145,000 $160,000 0.89 $346,000 0.47 $75,647 2.19
Other Eating & Drinking Places 278 $130,000 $149,500 0.89 $308,000 0.46 $75,000 2.03
Other Food Stores 89 $136,000 $150,000 0.90 $350,000 0.51 $80,000 2.01
Pet Shops & Supplies 21 $95,000 $95,000 0.92 $248,572 0.39 $67,712 1.59
Restaurants 1562 $128,750 $149,250 0.89 $401,739 0.38 $80,000 1.89
Supermarkets 63 $270,000 $275,000 0.86 $1,200,000 0.21 $160,000 1.98
Vending Machines 64 $150,000 $165,000 0.92 $212,000 0.79 $72,800 2.19
Service Agents & Brokers 31 $175,000 $173,500 0.93 $148,000 1.23 $88,000 2.48
Amusement & Recreation 84 $165,000 $189,000 0.87 $275,000 0.73 $84,416 2.26
Auto Repair, Parts & Services 251 $240,000 $260,000 0.91 $572,000 0.62 $120,840 2.52
Beauty Salons, Barber Shops 217 $80,000 $89,000 0.89 $208,520 0.50 $52,000 1.85
Computer & Software Services 43 $230,000 $250,000 0.90 $469,564 0.62 $113,059 2.04
Drycleaning/Laundry Services 325 $199,000 $224,900 0.90 $201,922 0.96 $79,776 2.69
Educational Services 94 $275,000 $325,000 0.88 $437,443 0.87 $112,410 3.17
Engineering & Accounting Svcs 36 $189,900 $225,000 0.93 $180,000 0.95 $87,329 2.11
Finance, Banking, Loans, etc. 27 $352,366 $425,000 0.92 $300,000 1.13 $165,000 2.35
Freight, Moving/Delivery 64 $262,500 $277,500 0.89 $482,798 0.65 $126,553 2.24
Health, Medical & Dental 259 $325,000 $350,000 0.94 $544,000 0.70 $151,000 2.39
Hotels & Other Lodging Places 56 $542,750 $577,500 0.90 $384,208 1.54 $144,075 3.44
Landscaping & Yard Services 163 $128,500 $139,500 0.93 $216,000 0.66 $82,541 1.83
Legal Services 10 $149,500 $192,000 0.82 $294,032 0.71 $112,281 1.59
Marine Repair, Parts & Services 6 $182,500 $205,000 0.89 $496,415 0.41 $100,875 1.90
Membership Organizations 7 $800,000 $950,000 0.92 $526,000 1.42 $180,000 3.19
Miscellaneous Repair Services 52 $300,000 $399,000 0.89 $700,000 0.68 $149,586 2.09
Miscellaneous Services 279 $142,990 $156,500 0.93 $242,218 0.71 $90,000 1.95
Motion Pictures 1 $1,100,000 $1,100,000 1.00 $2,703,647 0.41 $956,155 1.15
Museums, Art Galleries, Zoos 2 $222,500 $222,500 1.00 $822,999 0.49 $99,483 2.24
Other Business Services 248 $222,000 $250,000 0.91 $466,000 0.64 $116,900 2.27
Other Personal Services 176 $87,000 $96,000 0.94 $139,600 0.66 $75,000 1.34
Other Travel & Transportation 19 $400,000 $750,000 0.83 $1,230,000 0.70 $189,364 2.29
Passenger Transportation 26 $325,000 $345,000 0.91 $401,651 0.77 $123,237 2.63
Pet Care & Grooming 34 $160,000 $174,900 0.91 $247,922 0.96 $83,218 2.48
Social Services 6 $492,500 $607,450 0.56 $393,017 0.99 $110,604 3.08
Storage & Warehousing 10 $450,000 $480,000 0.94 $883,000 0.51 $212,500 2.12
Travel Agencies 10 $287,500 $355,000 0.84 $1,200,000 0.47 $146,500 1.99
Wholesale Durable Goods 71 $431,500 $497,000 0.91 $1,002,500 0.56 $172,978 2.80
Nondurable Goods 64 $175,000 $190,000 0.94 $425,000 0.47 $80,000 2.27

Source: Small business transactions reported on BizBuySell.com during 2013

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Closed Small Business Transaction Metrics by Geographic Market for the Full-Year 2013

Key metrics from transactions reported on BizBuySell.com by market during 2013

BizBuySell.com
Time Period:
2013
 
Source:
BizBuySell.com
Market # of Reported Sales Median Asking Price Median Sale Price Sales to Asking Price (average) Median Revenue Median Cash Flow Revenue Multiple (average) Cash Flow Multiple (average)
Albany-Schenectady-Troy, NY6$169,000$169,0001.00$460,000$185,1600.401.55
Albuquerque, NM8$240,000$211,5000.85$268,515$109,3130.792.23
Atlanta-Sandy Springs-Marietta, GA223$225,000$200,0000.87$540,000$105,0000.652.55
Austin-Round Rock, TX65$150,000$140,0000.96$367,969$97,0000.561.97
Baltimore-Towson, MD67$175,000$175,0000.87$473,847$81,0000.471.98
Birmingham-Hoover, AL8$190,000$165,0000.94$719,781$80,3620.401.76
Boston-Cambridge-Quincy, MA-NH195$230,000$208,0000.90$500,000$125,0000.492.06
Bridgeport-Stamford-Norwalk, CT44$285,000$275,0000.87$600,000$137,0000.592.13
Buffalo-Niagara Falls, NY5$127,5001225000.95$272,000$89,5160.783.15
Charlotte-Gastonia-Concord, NC-SC47$387,500$285,0000.91$601,197$104,9140.592.78
Chicago-Naperville-Joliet, IL-IN-WI164$179,900$150,0000.89$500,000$85,3230.632.28
Cincinnati-Middletown, OH-KY-IN30$350,000$285,0000.92$865,000$139,0000.502.77
Cleveland-Elyria-Mentor, OH36$159,000$125,0000.86$300,000$58,1840.592.44
Columbus, OH54$264,000$236,0000.86$702,511$121,0000.372.11
Contra Costa-Alameda-Solano, CA52$267,500$223,0000.92$450,500$117,5000.481.81
Dallas-Fort Worth-Arlington, TX192$230,000$220,0000.92$500,000$125,0000.612.32
Dayton, OH10$149,000$125,0000.90$377,466$85,0000.431.65
Denver-Aurora, CO133$229,700$225,0000.96$500,000$102,0000.552.23
Detroit-Warren-Livonia, MI81$169,000$150,0000.89$300,000$76,0000.502.11
Durham, NC7$372,500$337,6750.91$797,000$138,5000.442.16
Fresno, CA8$137,000$111,5000.90$154,500$58,0000.581.75
Greensboro-High Point, NC17$200,250$200,0000.98$253,000$90,0230.812.68
Hartford-West Hartford-East Hartford, CT18$299,000$190,0000.90$450,000$100,0000.422.99
Honolulu, HI7$85,000$78,4000.93$298,000$94,7270.611.53
Houston-Sugar Land-Baytown, TX154$167,500$160,0000.92$297,500$91,3820.652.22
Indianapolis-Carmel, IN62$149,450$105,0000.81$285,500$63,9840.431.90
Jacksonville, FL19$192,500$185,0000.88$331,197$73,2870.642.29
Kansas City, MO-KS47$292,000$275,0000.88$496,000$125,2680.632.69
Las Vegas-Paradise, NV39$122,000$107,5000.90$232,150$56,3460.561.71
Los Angeles-Long Beach-Santa Ana, CA658$175,500$156,0000.92$352,791$84,0000.562.14
Louisville-Jefferson County, KY-IN20$190,000$175,0000.85$294,000$60,0000.832.62
Memphis, TN-MS-AR15$542,500$422,5000.90$981,000$180,0000.422.57
Miami-Fort Lauderdale-Miami Beach, FL334$175,000$159,9500.89$379,600$85,0000.571.99
Milwaukee-Waukesha-West Allis, WI26$299,000$262,0000.94$572,000$143,0000.562.49
Minneapolis-St. Paul-Bloomington, MN-WI59$150,000$150,0000.88$320,878$70,0000.592.81
Nashville-Davidson--Murfreesboro, TN78$134,500$100,0000.79$350,000$64,5000.561.98
New Haven-Milford, CT19$350,000$450,0001.23$695,000$134,8940.602.46
New Jersey308$200,000$201,5000.96$379,468$117,0670.722.30
New Orleans-Metairie-Kenner, LA0       
New York-Northern New Jersey-Long Island, NY-NJ-PA552$262,500$229,5000.91$480,000$130,6130.642.18
Oklahoma City, OK10$160,000$201,0000.92$347,700$69,0000.622.70
Orange County, CA238$175,000$150,0000.93$339,330$78,3200.582.18
Orlando-Kissimmee, FL192$150,750$145,0000.89$360,000$89,7670.511.96
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD196$275,000$260,0000.93$473,200$130,0000.682.31
Phoenix-Mesa-Scottsdale, AZ162$165,000$145,0000.90$350,000$95,0000.601.99
Pittsburgh, PA25$425,000$350,0000.88$699,870$118,5920.662.63
Portland-Vancouver-Beaverton, OR-WA73$250,000$250,0000.92$444,206$100,5000.672.43
Providence-New Bedford-Fall River, RI-MA34$160,450$134,0000.86$411,741$90,0000.442.40
Raleigh-Cary, NC63$277,500$237,5000.92$392,579$107,0000.622.35
Richmond, VA28$250,000$245,0000.90$365,956$100,0000.532.11
Riverside-San Bernardino-Ontario, CA86$135,000$113,0000.91$249,000$66,5000.581.74
Rochester, NY2$199,0001750000.88$550,000$100,0000.321.75
Sacramento--Arden-Arcade--Roseville, CA57$189,000$155,0000.92$448,000$100,0000.592.02
Salt Lake City, UT31$450,000$450,0000.97$863,000$170,2460.662.56
San Antonio, TX34$189,000$175,0000.94$300,000$89,1230.682.66
San Diego-Carlsbad-San Marcos, CA124$133,500$122,4950.91$270,000$78,8740.571.79
San Francisco-Oakland-Fremont, CA102$325,000$300,0000.91$486,696$136,1730.592.25
San Jose-Sunnyvale-Santa Clara, CA26$220,000$197,5000.84$320,193$82,6190.522.13
Seattle-Tacoma-Bellevue, WA77$255,000$233,0000.92$500,000$100,0000.612.52
St. Louis, MO-IL8$97,500$95,0000.98$258,210$53,7070.321.96
Tampa-St. Petersburg-Clearwater, FL185$175,000$150,0000.91$329,471$87,5000.542.10
Tucson, AZ19$215,000$195,0000.92$238,696$76,2750.752.30
Tulsa, OK2$223,500$205,5000.91$536,897$77,1950.554.59
Virginia Beach-Norfolk-Newport News, VA-NC28$219,750$152,0000.81$454,450$72,5000.482.08
Washington-Arlington-Alexandria, DC-VA-MD-WV207$227,500$200,0000.91$446,185$108,0000.572.22
Wichita, KS11$234,000$192,2250.81$330,804$77,9160.642.29
Winston-Salem, NC11$220,000$194,5000.94$642,000$132,0000.552.13

Source: Small business transactions reported on BizBuySell.com during 2013

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About BizBuySell

BizBuySell is the Internet's largest business for sale marketplace. Since 1996, BizBuySell has offered tools that make it easy for business owners and brokers to sell a business, and potential buyers to find the business of their dreams. BizBuySell currently has an inventory of approximately businesses - spanning 80 countries - for sale at any one time and receives more than unique monthly visits. The site also features an extensive franchise directory as well as an easy-to-use business valuation tool. Please visit www.bizbuysell.com for more information.

BizBuySell was founded in 1996 and in 2012 became a division of CoStar Group, Inc. (NASDAQ - CSGP) - commercial real estate's leading provider of information and analytic services. CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information and offers a suite of online services enabling clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. For more information, visit www.costar.com.


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