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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 844-420-0508


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Closed Small Business Transaction Metrics by Sector for the Full-Year 2014

Key metrics from transactions reported on BizBuySell.com by sector during 2014

BizBuySell.com
Time Period:
2014
 
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)
Agriculture Agriculture 6 $1,687,500 $1,900,000 0.88 $3,567,833 0.55 $776,817 2.26
Communications Communications 10 $221,000 $285,000 0.94 $336,204 0.55 $122,056 2.23
Construction Construction-Building 15 $237,500 $264,500 0.96 $748,526 0.49 $136,876 2.10
Construction-Heavy 4 $920,000 $950,000 0.73 $738,215 1.09 $320,000 3.09
Construction-Special Trades 94 $425,000 $450,000 0.90 $813,000 0.50 $200,000 2.32
Electric, Gas, Water, Sanitary Svcs Electric, Gas, Water, Sanitary Svcs 7 $250,000 $275,000 0.91 $530,000 0.82 $160,000 2.58
Internet Business Services (B2B) 58 $237,000 $249,500 0.92 $248,056 1.25 $90,627 2.50
Consumer Services (B2C) 94 $137,000 $150,000 0.90 $225,528 0.91 $68,422 2.09
Domain Name/Basic Site 4 $120,000 $120,000 0.68 $308,294 0.69 $89,786 1.25
General Internet 42 $124,900 $135,000 0.97 $128,177 1.34 $61,298 2.23
Software 27 $175,000 $210,000 0.89 $110,564 1.61 $85,776 2.53
Web Design/Tech Services 10 $298,800 $298,800 0.94 $381,600 0.79 $138,000 2.15
Manufacturing Apparel & finished fabrics 14 $275,000 $595,000 0.83 $605,000 0.49 $100,000 2.37
Chemicals & Allied Products 8 $900,000 $925,000 0.87 $1,511,783 0.57 $240,500 3.16
Electronic & Electrical Equip. 10 $665,000 $1,008,750 0.78 $1,169,000 0.67 $375,000 2.37
Fabricated Metal Products 60 $750,000 $1,000,000 0.88 $1,200,000 0.71 $333,000 2.81
Food and Kindred Products 26 $286,000 $295,000 0.88 $400,000 0.79 $90,000 2.86
Furniture and Fixtures 17 $450,000 $575,000 0.88 $1,100,000 0.44 $186,293 2.79
Industrial & Comm. Machinery 10 $480,000 $495,000 0.98 $900,000 0.81 $271,000 3.62
Lumber and Wood Products 11 $400,000 $450,000 0.94 $1,073,146 0.49 $208,332 2.51
Measuring & Analyzing Instr. 3 $606,250 $659,500 0.91 $808,201 1.05 $194,445 3.14
Miscellaneous 45 $424,995 $449,995 0.92 $751,327 0.78 $187,500 2.67
Paper & Allied Products 3 $70,000 $79,000 0.93 $111,434 0.79 $42,011 2.49
Primary Metal Industries 11 $1,127,500 $1,242,000 0.89 $1,625,000 0.69 $340,406 3.11
Printing, Publishing 45 $220,000 $225,000 0.89 $364,000 0.58 $93,122 2.10
Rubber and Plastic Products 11 $720,000 $850,000 0.93 $581,000 0.83 $172,200 3.46
Stone, Clay, Glass, Concrete 8 $316,000 $325,000 1.28 $922,658 0.45 $138,994 2.56
Textile Mill Products 2 $850,000 $850,000 1.00 $1,642,547 0.52 $177,875 4.78
Tobacco Products 2 $77,500 $87,500 0.88 $498,023 0.29 $75,728 1.33
Transportation Equipment 7 $1,692,500 $1,725,000 0.92 $2,035,820 0.70 $258,450 4.80
Retail Restaurants 1546 $150,000 $169,000 0.89 $480,000 0.39 $94,070 1.96
Apparel and Accessory Stores 73 $195,000 $199,500 0.91 $440,000 0.47 $88,826 2.13
Automotive Dealers 37 $500,000 $495,000 0.99 $2,100,000 0.37 $200,000 3.02
Bars/Taverns 268 $225,000 $250,000 0.88 $588,000 0.48 $100,000 2.41
Blding Mat., Hardware, Garden 26 $209,000 $212,500 0.94 $468,581 0.64 $99,902 2.45
Convenience Stores 266 $140,000 $150,000 0.89 $540,000 0.36 $94,000 2.07
Florists 38 $100,000 $144,000 0.87 $334,598 0.37 $65,320 1.78
Gasoline Service Stations 263 $240,000 $249,000 0.92 $751,800 0.47 $134,497 2.74
General Merchandise Stores 34 $98,000 $100,000 0.90 $464,854 0.35 $73,500 1.84
Home Furniture & Furnishings 30 $225,000 $275,000 0.84 $600,000 0.38 $120,000 2.64
Liquor Stores 282 $300,000 $342,500 0.93 $765,000 0.50 $120,000 2.96
Marine Dealers & Equipment 9 $540,000 $500,000 0.95 $352,382 1.27 $95,893 4.49
Miscellaneous Retail 245 $165,000 $199,000 0.88 $377,367 0.48 $86,882 2.02
Other Eating & Drinking Places 285 $125,000 $149,900 0.88 $315,000 0.43 $72,000 1.90
Other Food Stores 64 $118,800 $130,000 0.92 $300,000 0.54 $76,000 1.99
Pet Shops & Supplies 15 $161,000 $199,999 0.96 $340,000 0.64 $70,000 2.44
Supermarkets 49 $395,000 $399,000 0.97 $820,000 0.69 $150,000 3.57
Vending Machines 84 $115,000 $125,000 0.91 $329,992 0.62 $60,661 2.02
Service Agents & Brokers 34 $118,800 $125,000 0.88 $126,000 1.15 $51,200 2.41
Amusement & Recreation 58 $190,000 $197,500 0.90 $297,312 0.80 $77,705 2.50
Auto Repair, Parts & Services 234 $265,000 $299,000 0.94 $621,000 0.66 $135,312 2.53
Beauty Salons, Barber Shops 227 $94,800 $99,000 0.91 $208,698 0.45 $64,311 1.75
Computer & Software Services 35 $265,000 $275,000 0.89 $396,273 0.80 $102,511 2.47
Drycleaning/Laundry Services 289 $175,000 $192,500 0.91 $204,000 0.91 $74,735 2.68
Educational Services 96 $160,250 $175,000 0.93 $348,854 0.70 $85,000 2.50
Engineering & Accounting Svcs 52 $195,000 $195,000 0.94 $304,000 0.88 $120,000 2.15
Finance, Banking, Loans, etc. 23 $386,750 $392,500 0.92 $441,500 1.06 $178,500 2.21
Freight, Moving/Delivery 104 $355,000 $389,999 0.92 $500,000 0.73 $144,000 2.56
Health, Medical & Dental 254 $280,000 $299,000 0.91 $497,988 0.70 $145,410 2.28
Hotels & Other Lodging Places 62 $187,500 $245,000 0.92 $272,954 1.43 $100,846 3.18
Landscaping & Yard Services 118 $142,500 $160,000 0.94 $206,279 0.65 $90,244 1.67
Legal Services 8 $175,000 $175,000 0.90 $143,375 1.03 $99,865 1.99
Marine Repair, Parts & Services 8 $325,000 $399,000 0.85 $485,653 0.80 $168,585 2.03
Membership Organizations 6 $125,000 $150,000 0.80 $182,000 0.65 $45,596 2.92
Miscellaneous Repair Services 61 $210,000 $225,000 0.89 $495,000 0.54 $121,000 2.13
Miscellaneous Services 273 $175,000 $197,000 0.91 $322,213 0.70 $103,583 2.08
Motion Pictures 2 $280,000 $350,000 0.80 $650,000 0.43 $150,000 1.87
Museums, Art Galleries, Zoos 6 $85,000 $99,000 0.86 $180,000 0.47 $47,000 1.71
Other Business Services 347 $250,000 $272,500 0.94 $444,651 0.68 $116,654 2.44
Other Personal Services 209 $72,000 $72,000 0.96 $105,400 0.70 $73,000 1.38
Other Travel & Transportation 24 $375,000 $425,000 0.96 $598,000 0.70 $200,000 2.36
Passenger Transportation 21 $275,000 $275,000 0.96 $363,000 0.86 $125,050 2.37
Pet Care & Grooming 44 $172,500 $193,500 0.91 $350,000 0.81 $101,542 2.35
Social Services 4 $290,000 $300,000 0.97 $177,551 1.63 $41,345 7.01
Storage & Warehousing 10 $2,662,500 $2,775,000 0.91 $1,050,583 2.28 $380,443 6.32
Travel Agencies 6 $162,500 $165,000 0.94 $251,606 0.77 $77,627 2.07
Wholesale Durable Goods 60 $420,000 $463,650 0.92 $1,072,000 0.61 $183,290 2.73
Nondurable Goods 91 $135,000 $143,000 0.92 $403,312 0.49 $70,737 2.20
Other Non-classifiable Establishments 6 $500,000 $650,000 0.91 $649,792 1.54 $90,000 3.58

Source: Small business transactions reported on BizBuySell.com during 2014

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Closed Small Business Transaction Metrics by Geographic Market for the Full-Year 2014

Key metrics from transactions reported on BizBuySell.com by market during 2014

BizBuySell.com
Time Period:
2014
 
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, NY 9 $399,000 $399,000 0.96 $1,045,801 $147,203 0.47 2.26
Albuquerque, NM 5 $496,000 $447,500 0.91 $1,017,576 $201,140 0.63 2.43
Atlanta-Sandy Springs-Marietta, GA 197 $277,500 $256,000 0.91 $533,635 $121,444 0.65 2.47
Austin-Round Rock, TX 65 $154,100 $137,500 0.93 $323,838 $107,582 0.63 2.09
Baltimore-Towson, MD 86 $274,500 $244,200 0.87 $600,000 $101,216 0.51 2.32
Birmingham-Hoover, AL 14 $320,000 $307,500 0.89 $373,176 $72,561 0.61 3.29
Boston-Cambridge-Quincy, MA-NH 229 $198,000 $175,000 0.89 $442,459 $115,000 0.50 2.09
Bridgeport-Stamford-Norwalk, CT 29 $230,000 $230,000 0.95 $487,500 $126,400 0.60 1.98
Buffalo-Niagara Falls, NY 11 $267,450 $250,000 0.94 $522,500 $98,000 0.62 3.43
Charlotte-Gastonia-Concord, NC-SC 67 $255,500 $231,250 0.94 $496,040 $120,235 0.63 2.53
Chicago-Naperville-Joliet, IL-IN-WI 226 $179,000 $150,000 0.85 $436,000 $83,623 0.49 2.26
Cincinnati-Middletown, OH-KY-IN 20 $197,000 $180,000 0.92 $545,168 $88,632 0.51 2.21
Cleveland-Elyria-Mentor, OH 20 $350,000 $300,000 0.86 $450,000 $129,000 0.60 2.86
Columbus, OH 45 $132,450 $116,500 0.78 $286,778 $72,120 0.48 2.02
Dallas-Fort Worth-Arlington, TX 196 $225,000 $225,000 0.92 $419,000 $110,000 0.67 2.39
Dayton, OH 11 $420,492 $360,000 0.83 $701,000 $194,275 0.80 2.67
Denver-Aurora, CO 134 $225,000 $225,000 0.94 $550,000 $104,000 0.57 2.14
Detroit-Warren-Livonia, MI 83 $225,000 $200,000 0.90 $382,908 $89,385 0.65 2.52
Durham, NC 6 $69,995 $60,000 0.80 $376,174 $54,000 0.55 1.72
Greensboro-High Point, NC 13 $304,000 $256,750 0.84 $934,000 $150,803 0.68 2.58
Hartford-West Hartford-East Hartford, CT 41 $199,000 $199,000 0.93 $350,000 $74,400 0.49 2.05
Honolulu, HI 11 $250,000 $280,000 0.95 $416,894 $153,603 0.71 2.31
Houston-Sugar Land-Baytown, TX 131 $207,000 $187,500 0.93 $379,424 $89,188 0.60 2.24
Indianapolis-Carmel, IN 53 $243,900 $217,000 0.89 $628,100 $107,994 0.42 2.17
Jacksonville, FL 33 $149,900 $146,500 0.90 $362,204 $107,226 0.54 2.16
Kansas City, MO-KS 36 $282,500 $275,000 0.95 $533,000 $113,500 0.60 2.23
Las Vegas-Paradise, NV 56 $150,000 $122,500 0.90 $314,623 $76,326 0.49 1.72
Los Angeles-Long Beach-Santa Ana, CA 717 $199,000 $189,000 0.95 $420,000 $90,307 0.64 2.45
Louisville-Jefferson County, KY-IN 20 $207,000 $167,500 0.88 $437,500 $83,500 0.59 2.66
Memphis, TN-MS-AR 28 $255,000 $215,000 0.84 $690,500 $136,528 0.51 2.24
Miami-Fort Lauderdale-Miami Beach, FL 300 $165,000 $150,000 0.89 $320,249 $96,338 0.61 2.04
Milwaukee-Waukesha-West Allis, WI 24 $225,000 $159,250 0.84 $489,580 $87,741 0.41 2.21
Minneapolis-St. Paul-Bloomington, MN-WI 31 $225,000 $175,000 0.90 $453,346 $80,000 0.55 2.51
Nashville-Davidson--Murfreesboro, TN 94 $237,000 $192,500 0.87 $417,791 $100,000 0.52 2.23
New Haven-Milford, CT 20 $203,500 $135,000 0.83 $463,441 $95,350 0.53 2.01
New Orleans-Metairie-Kenner, LA 10 $275,000 $186,010 0.94 $760,000 $100,000 0.37 2.83
New York-Northern New Jersey-Long Island, NY-NJ-PA 455 $222,000 $200,000 0.92 $416,000 $120,000 0.68 2.13
Oklahoma City, OK 17 $417,500 $360,000 0.87 $614,821 $132,001 0.62 2.16
Orlando-Kissimmee, FL 194 $165,000 $144,500 0.89 $306,095 $83,196 0.56 1.81
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 185 $252,500 $238,125 0.92 $505,000 $114,025 0.65 2.34
Phoenix-Mesa-Scottsdale, AZ 195 $185,000 $157,500 0.91 $378,332 $97,064 0.61 2.01
Pittsburgh, PA 18 $437,500 $413,500 0.92 $511,104 $143,037 0.69 2.88
Portland-Vancouver-Beaverton, OR-WA 66 $200,000 $200,000 0.91 $470,670 $84,046 0.64 2.54
Providence-New Bedford-Fall River, RI-MA 32 $350,000 $250,000 0.88 $696,000 $129,228 0.88 2.70
Raleigh-Cary, NC 52 $260,000 $225,000 0.90 $376,470 $125,280 0.66 2.18
Richmond, VA 26 $212,500 $177,500 0.92 $487,500 $98,500 0.39 2.09
Riverside-San Bernardino-Ontario, CA 97 $182,250 $160,000 0.93 $400,153 $83,000 0.61 2.15
Rochester, NY 4 $189,000 $175,000 0.86 $211,000 $101,000 0.83 1.55
Sacramento--Arden-Arcade--Roseville, CA 40 $176,500 $190,000 0.97 $272,700 $67,225 0.87 2.56
Salt Lake City, UT 53 $200,000 $183,750 0.90 $366,341 $103,920 0.61 2.28
San Antonio, TX 50 $148,000 $120,000 0.89 $415,999 $77,000 0.61 2.05
San Diego-Carlsbad-San Marcos, CA 164 $175,000 $165,000 0.94 $300,000 $81,548 0.79 2.17
San Francisco-Oakland-Fremont, CA 86 $198,000 $180,000 0.91 $229,775 $100,426 0.91 2.08
San Jose-Sunnyvale-Santa Clara, CA 33 $149,000 $130,000 0.95 $354,664 $81,109 0.60 2.35
Seattle-Tacoma-Bellevue, WA 89 $325,000 $300,000 0.90 $673,852 $143,588 0.52 2.58
St. Louis, MO-IL 23 $133,500 $132,900 0.89 $280,000 $100,154 0.30 1.65
Tampa-St. Petersburg-Clearwater, FL 245 $139,000 $120,000 0.91 $311,973 $83,090 0.55 1.85
Tucson, AZ 23 $127,500 $115,750 0.89 $352,993 $73,690 0.46 1.98
Tulsa, OK 13 $340,000 $227,500 0.83 $432,622 $151,250 0.60 2.23
Virginia Beach-Norfolk-Newport News, VA-NC 40 $189,000 $173,500 0.86 $471,714 $81,923 0.53 2.45
Washington-Arlington-Alexandria, DC-VA-MD-WV 161 $216,163 $179,400 0.86 $477,500 $103,500 0.45 1.95
Wichita, KS 7 $235,000 $200,000 0.88 $230,000 $108,000 1.11 3.55
Winston-Salem, NC 7 $435,000 $447,500 0.98 $1,887,000 $153,000 0.46 3.36
Orange County, CA 222 $160,000 $150,000 0.94 $363,000 $82,800 0.58 2.21
Contra Costa-Alameda-Solano, CA 30 $191,500 $182,500 0.93 $576,216 $114,500 0.70 2.09
New Jersey 196 $236,900 $223,500 0.93 $480,650 $120,000 0.60 2.26

Source: Small business transactions reported on BizBuySell.com during 2014

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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 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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