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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 2015

Key metrics from transactions reported on BizBuySell.com by sector during 2015

BizBuySell.com
Time Period:
2015
 
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 4 $1,257,198 $1,189,500 1.18 $2,000,068 0.57 $298,153 3.91
Communications Communications 4 $625,000 $625,000 0.77 $2,224,000 0.29 $204,128 2.45
Construction Construction-Building 20 $275,000 $299,000 0.88 $1,200,000 0.34 $178,000 1.80
Construction-Heavy 5 $1,700,000 $2,500,000 0.93 $5,740,000 0.50 $560,000 3.14
Construction-Special Trades 105 $500,000 $537,000 0.90 $1,170,598 0.52 $240,207 2.21
Electric, Gas, Water, Sanitary Svcs Electric, Gas, Water, Sanitary Svcs 12 $1,899,000 $2,000,000 0.90 $1,153,483 0.70 $358,000 3.33
Internet Business Services (B2B) 70 $364,398 $395,000 0.90 $401,897 1.02 $157,430 2.54
Consumer Services (B2C) 76 $154,000 $175,000 0.87 $258,782 0.82 $97,443 1.96
Domain Name/Basic Site 3 $982,500 $1,025,250 0.85 $2,115,008 0.38 $264,663 2.64
General Internet 77 $137,500 $142,000 1.01 $120,022 1.53 $68,521 2.60
Software 10 $600,000 $650,000 0.98 $707,000 1.07 $215,316 3.72
Web Design/Tech Services 4 $342,500 $357,500 0.96 $245,975 1.42 $139,455 2.56
Manufacturing Apparel & finished fabrics 11 $150,000 $150,000 0.91 $252,285 0.65 $95,000 2.57
Chemicals & Allied Products 4 $555,000 $600,000 0.82 $762,968 0.64 $136,166 3.27
Electronic & Electrical Equip. 19 $800,000 $875,000 0.87 $1,034,965 0.71 $230,000 2.92
Fabricated Metal Products 71 $745,000 $795,000 0.90 $1,061,564 0.75 $280,150 2.82
Food and Kindred Products 24 $362,500 $392,500 0.88 $754,040 0.63 $111,214 3.34
Furniture and Fixtures 10 $502,500 $537,500 0.93 $748,389 0.51 $239,804 2.01
Industrial & Comm. Machinery 16 $694,800 $765,000 0.89 $966,030 0.81 $241,000 2.83
Lumber and Wood Products 13 $700,000 $750,000 0.83 $1,200,000 0.54 $186,795 2.71
Measuring & Analyzing Instr. 2 $985,000 $997,500 0.97 $654,500 1.34 $338,000 2.92
Miscellaneous 62 $450,000 $575,000 0.89 $1,034,819 0.68 $190,000 2.96
Paper & Allied Products 1 $999,998 $999,998 1.00 $1,881,203 0.53 $286,101 3.50
Primary Metal Industries 14 $470,500 $680,000 0.78 $707,581 0.75 $216,046 2.84
Printing, Publishing 55 $267,000 $347,000 0.84 $707,396 0.55 $150,605 2.24
Rubber and Plastic Products 9 $927,000 $1,200,000 0.86 $2,000,000 0.54 $250,000 3.84
Stone, Clay, Glass, Concrete 9 $450,000 $450,000 0.95 $850,000 0.69 $215,409 2.63
Tobacco Products 2 $4,615,000 $4,634,500 0.93 $4,427,418 0.99 $1,595,000 2.11
Transportation Equipment 3 $5,000,000 $5,000,000 0.88 $6,000,000 1.07 $1,133,000 3.90
Retail Apparel and Accessory Stores 88 $125,000 $156,500 0.88 $341,933 0.47 $93,407 1.89
Automotive Dealers 27 $355,000 $360,000 0.97 $947,223 0.46 $140,573 3.18
Bars/Taverns 279 $180,000 $220,000 0.88 $534,000 0.41 $105,692 2.12
Blding Mat., Hardware, Garden 29 $375,000 $425,000 0.90 $1,206,910 0.36 $220,025 2.38
Convenience Stores 282 $170,000 $187,000 0.89 $602,500 0.39 $100,000 2.32
Florists 41 $95,000 $110,000 0.91 $325,000 0.36 $64,023 1.81
Gasoline Service Stations 216 $320,000 $375,000 0.86 $800,000 0.60 $166,000 2.60
General Merchandise Stores 37 $125,000 $150,000 0.90 $345,000 0.41 $84,000 1.78
Home Furniture & Furnishings 38 $265,500 $287,500 0.93 $748,814 0.41 $150,582 2.02
Liquor Stores 289 $305,000 $350,000 0.92 $776,408 0.44 $131,000 2.56
Marine Dealers & Equipment 4 $230,000 $229,000 0.98 $472,971 0.62 $118,545 2.87
Miscellaneous Retail 202 $200,000 $225,000 0.88 $476,000 0.47 $94,000 2.27
Other Eating & Drinking Places 247 $112,000 $145,000 0.86 $315,000 0.45 $62,960 2.03
Other Food Stores 75 $144,000 $150,000 0.89 $373,000 0.49 $70,000 2.13
Pet Shops & Supplies 20 $147,500 $185,000 0.89 $450,000 0.37 $76,100 2.06
Restaurants 1590 $155,000 $180,000 0.89 $500,000 0.39 $92,000 2.01
Supermarkets 51 $399,000 $495,000 0.88 $1,700,000 0.28 $223,896 2.25
Vending Machines 93 $119,400 $130,000 0.95 $409,663 0.48 $64,493 2.02
Service Agents & Brokers 38 $205,000 $225,000 0.87 $242,796 0.99 $80,000 2.35
Amusement & Recreation 90 $280,000 $300,000 0.90 $420,000 0.83 $117,848 2.53
Auto Repair, Parts & Services 227 $214,800 $250,000 0.88 $576,634 0.65 $120,412 2.43
Beauty Salons, Barber Shops 239 $75,000 $89,900 0.88 $240,611 0.46 $55,000 1.72
Computer & Software Services 33 $362,500 $437,000 0.89 $635,958 0.71 $137,980 2.44
Drycleaning/Laundry Services 316 $175,000 $194,900 0.91 $180,000 0.99 $67,600 2.86
Educational Services 126 $240,000 $250,000 0.90 $477,036 0.70 $119,000 2.50
Engineering & Accounting Svcs 57 $240,005 $270,000 0.92 $280,000 1.02 $130,000 2.24
Finance, Banking, Loans, etc. 39 $135,000 $179,000 0.90 $520,000 0.94 $142,000 2.32
Freight, Moving/Delivery 138 $500,000 $519,000 0.92 $676,267 0.71 $174,642 2.76
Health, Medical & Dental 342 $274,900 $300,000 0.90 $499,184 0.66 $138,000 2.42
Hotels & Other Lodging Places 62 $799,950 $849,500 0.85 $658,899 1.49 $191,046 4.12
Landscaping & Yard Services 158 $148,250 $150,000 0.94 $244,536 0.65 $98,303 1.69
Legal Services 6 $180,000 $230,000 0.89 $694,801 0.51 $169,805 1.23
Marine Repair, Parts & Services 6 $193,500 $197,500 0.96 $425,630 0.51 $143,416 1.15
Membership Organizations 5 $199,000 $199,000 0.85 $270,000 0.63 $70,777 2.44
Miscellaneous Repair Services 53 $343,000 $397,000 0.91 $501,500 0.63 $150,140 2.27
Miscellaneous Services 258 $150,000 $169,500 0.92 $289,155 0.73 $90,628 2.03
Motion Pictures 2 $188,000 $188,000 1.00 $344,872 0.55 $94,249 1.99
Museums, Art Galleries, Zoos 3 $139,000 $139,000 1.00 $327,500 0.42 $86,216 1.61
Other Business Services 286 $272,400 $282,500 0.92 $406,688 0.67 $111,279 2.23
Other Personal Services 182 $74,100 $82,061 0.94 $115,902 0.73 $77,500 1.47
Other Travel & Transportation 12 $450,000 $575,000 0.83 $1,108,000 0.78 $194,000 2.82
Passenger Transportation 20 $225,000 $324,500 0.87 $332,685 0.93 $109,258 2.20
Pet Care & Grooming 54 $125,000 $150,000 0.90 $294,508 0.76 $86,818 2.34
Social Services 4 $205,000 $237,000 0.88 $319,704 0.92 $73,621 2.76
Storage & Warehousing 7 $255,000 $395,000 0.60 $540,000 0.48 $175,000 1.50
Travel Agencies 10 $217,500 $250,000 0.88 $423,214 0.66 $127,000 1.62
Wholesale Durable Goods 60 $615,500 $624,500 0.91 $1,240,000 0.65 $210,532 2.70
Nondurable Goods 71 $170,000 $181,000 0.94 $492,974 0.50 $87,179 2.30
Other Non-classifiable Establishments 3 $1,862,500 $2,062,500 0.95 $1,498,899 1.19 $706,551 2.46

Source: Small business transactions reported on BizBuySell.com during 2015

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Closed Small Business Transaction Metrics by Geographic Market for the Full-Year 2015

Key metrics from transactions reported on BizBuySell.com by market during 2015

BizBuySell.com
Time Period:
2015
 
Source:
BizBuySell.com
Market # of Reported Sales Median Sale Price Median Asking Price Sales to Asking Price (average) Median Revenue Revenue Multiple (average) Median Cash Flow Cash Flow Multiple (average)
Albany-Schenectady-Troy, NY11$336,000$336,0000.91$607,5810.80$164,1652.73
Albuquerque, NM8$135,000$179,0000.85$328,3350.63$87,4991.73
Atlanta-Sandy Springs-Marietta, GA224$170,000$194,9000.86$362,4270.66$94,0002.25
Austin-Round Rock, TX65$250,000$257,0000.93$409,9380.73$112,1172.14
Baltimore-Towson, MD92$390,000$409,9980.92$825,0000.63$167,0412.39
Birmingham-Hoover, AL22$215,000$230,0000.87$734,0000.41$105,2942.19
Boston-Cambridge-Quincy, MA-NH219$171,840$180,0000.92$468,0000.62$105,0001.98
Bridgeport-Stamford-Norwalk, CT35$206,000$230,0000.84$420,7000.46$126,5001.82
Buffalo-Niagara Falls, NY10$273,600$273,6000.98$720,0000.80$125,2323.14
Charlotte-Gastonia-Concord, NC-SC49$349,000$349,0000.95$700,0000.54$159,5882.44
Chicago-Naperville-Joliet, IL-IN-WI194$215,000$257,5000.85$490,0000.55$106,5442.27
Cincinnati-Middletown, OH-KY-IN16$177,500$195,0000.85$414,2930.48$92,0002.69
Cleveland-Elyria-Mentor, OH27$249,000$265,0000.89$547,0480.49$103,0002.42
Columbus, OH37$120,000$153,0000.86$316,4010.43$90,0001.75
Contra Costa-Alameda-Solano, CA59$269,000$295,0000.94$463,9190.72$110,0002.17
Dallas-Fort Worth-Arlington, TX227$175,000$199,5000.91$471,4670.61$97,7632.36
Dayton, OH12$259,000$259,0001.01$305,0000.63$80,0003.09
Denver-Aurora, CO117$256,000$307,4500.92$590,0000.52$120,2052.32
Detroit-Warren-Livonia, MI86$130,000$159,0000.88$320,0890.64$79,8212.49
Durham, NC8$271,250$335,0000.80$738,5120.36$116,9452.30
Fresno, CA7$110,000$110,0001.00$66,8001.78$59,0002.23
Greensboro-High Point, NC4$399,000$399,0000.99$697,3861.04$113,9343.26
Hartford-West Hartford-East Hartford, CT37$180,000$199,0000.85$540,0000.42$101,8001.91
Honolulu, HI5$450,000$900,0000.50$1,500,0000.30$300,0001.50
Houston-Sugar Land-Baytown, TX135$195,000$215,0000.92$363,0000.58$99,4812.13
Indianapolis-Carmel, IN24$225,000$238,0000.90$400,0000.51$101,0001.83
Jacksonville, FL52$141,891$150,0000.87$400,0000.58$79,2201.98
Kansas City, MO-KS31$341,250$372,5000.91$614,6050.70$160,2582.58
Las Vegas-Paradise, NV61$110,000$125,0000.85$263,5930.54$74,0001.96
Los Angeles-Long Beach-Santa Ana, CA461$185,000$200,0000.89$421,0000.62$96,0942.20
Louisville-Jefferson County, KY-IN27$199,000$249,0000.87$360,0000.59$104,0002.39
Memphis, TN-MS-AR23$350,000$395,0000.89$800,0000.62$165,0002.59
Miami-Fort Lauderdale-Miami Beach, FL460$165,000$194,5000.89$347,7350.57$88,9062.03
Milwaukee-Waukesha-West Allis, WI17$625,500$695,0000.85$600,0000.77$174,9912.91
Minneapolis-St. Paul-Bloomington, MN-WI58$250,000$299,0000.90$539,0000.64$103,9592.70
Nashville-Davidson--Murfreesboro, TN99$200,000$225,0000.88$550,0000.48$100,0002.14
New Haven-Milford, CT21$370,000$450,0000.85$744,3880.54$187,0002.18
New Jersey169$270,000$299,0000.91$475,0000.76$126,7182.55
New Orleans-Metairie-Kenner, LA9$390,000$390,0000.93$690,7680.80$115,4603.67
New York-Northern New Jersey-Long Island, NY-NJ-PA398$280,000$300,0000.89$600,0000.67$144,0002.29
Oklahoma City, OK19$230,000$350,0000.86$881,6080.47$137,9842.29
Orange County, CA177$187,500$199,9950.90$397,0000.58$90,0002.25
Orlando-Kissimmee, FL183$125,000$135,0000.90$273,2640.56$79,6141.93
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD138$250,000$275,0000.91$534,0000.68$140,0002.36
Phoenix-Mesa-Scottsdale, AZ227$125,000$150,0000.91$336,6870.56$80,0001.96
Pittsburgh, PA25$400,000$452,0000.89$800,0000.49$170,0002.26
Portland-Vancouver-Beaverton, OR-WA75$195,000$227,0000.90$487,1510.51$98,5002.45
Providence-New Bedford-Fall River, RI-MA30$160,000$225,0000.92$449,0000.55$98,0002.53
Raleigh-Cary, NC47$340,000$425,0000.91$625,0000.66$157,2792.52
Richmond, VA37$145,000$170,0000.86$767,0000.54$85,0002.09
Riverside-San Bernardino-Ontario, CA95$268,995$299,0000.90$695,0220.51$125,1682.38
Rochester, NY15$200,000$250,0000.82$910,0000.33$175,0001.58
Sacramento--Arden-Arcade--Roseville, CA50$140,000$150,0000.94$240,0000.73$70,0002.53
Salt Lake City, UT49$425,000$435,0000.89$634,5390.70$154,7462.59
San Antonio, TX25$216,000$239,0000.89$535,6360.65$128,6162.22
San Diego-Carlsbad-San Marcos, CA128$150,000$185,0000.89$342,0360.64$84,6122.09
San Francisco-Oakland-Fremont, CA106$123,750$160,0000.91$249,5000.83$85,8562.17
San Jose-Sunnyvale-Santa Clara, CA57$185,000$225,0000.91$489,6950.59$121,9381.90
Seattle-Tacoma-Bellevue, WA83$252,500$275,0000.92$555,0000.66$140,3002.41
St. Louis, MO-IL28$190,000$227,5000.90$655,8140.52$84,4442.78
Tampa-St. Petersburg-Clearwater, FL251$130,000$149,0000.93$296,4000.59$81,3201.95
Tucson, AZ22$180,000$199,0000.92$397,5530.57$71,0602.40
Tulsa, OK5$262,500$280,0000.92$460,5300.45$95,6762.93
Virginia Beach-Norfolk-Newport News, VA-NC29$185,000$198,0000.84$432,3550.57$74,6702.33
Washington-Arlington-Alexandria, DC-VA-MD-WV151$235,000$279,0000.86$600,0000.54$120,0002.16
Wichita, KS3$140,000$155,0000.93$209,7001.05$40,0003.13
Winston-Salem, NC3$129,000$140,0000.92$1,270,0000.10$140,0000.92

Source: Small business transactions reported on BizBuySell.com during 2015

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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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