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Business-for-Sale Transactions Jump Nearly 4% from First Quarter of 2011 According to BizBuySell.com Insight Report

BizBuySell
April 4, 2012

BizBuySell's Q1 data indicate most business sale transactions since fourth quarter of 2008

San Francisco, CA - April 4, 2012 -- BizBuySell.com, the Internet's largest business-for-sale marketplace, reported Wednesday that nearly four percent more businesses were sold in the first quarter of 2012 compared to the same period last year. The results were included in BizBuySell's First Quarter 2012 Insight Report.

The report, which aggregates business-for-sale transactions reported by participating business brokers nationwide, showed continued improvement in the business-for-sale market. In total, 1,729 closed transactions were reported in the first quarter of 2012, a 3.9 percent increase from Q1 2011.

2012 Q1 Closed Small Business Transactions

The 1,729 businesses that were reported sold in the first quarter of 2012 mark the largest number of transactions since the fourth quarter of 2008, making this quarter the most active in over three years. Additionally, the quarter marks the third straight period of increasing business transactions after both Q3 and Q4 of 2011 saw improving conditions.

"Seeing small business transaction totals reach 2008 levels bodes well for the upcoming months," Mike Handelsman, group general manager of BizBuySell.com and BizQuest.com said. "While we are not out of the woods yet, economic factors are slowly improving and have given the business-for-sale marketplace a nice boost to start 2012."

Lower Valuations Lead to Lower Prices

A main driver of the increase in transactions is that business owners were willing to accept lower prices than in previous quarters. While total closed transactions increased in Q1 of 2012, average sale price as a multiple of both revenue and cash flow decreased compared with the same period last year. The average sale price as a multiple of annual revenue fell over 10 percent to 0.59, the lowest since the financial crisis at the end of 2008. The average sale price as a multiple of cash flow decreased by 4.7 percent to 2.36.

2012 Q1 Small Business Sale Price Multiples

These falling multiples may point to business owners becoming more realistic about final sale prices. While median asking prices for sold businesses actually increased by $1,000, the median final sale price dropped 3.2 percent, from $155,000 in Q1 2011 to $150,000 in Q1 2012.

"Business owners are continuing to adjust their pricing in order to expedite a sale," Handelsman said. "While some may still be holding out for an economic recovery, many more are trying to exit at acceptable prices, even if it means settling for a lower number than they originally expected."

Better Financing Options, Unemployment Create Demand

Throughout the recession, one of the main obstacles for buyers to overcome was financing the transactions. Over the past year, credit market conditions have become more favorable. Banks are lending and more business owners are offering seller financing to prospective buyers. High unemployment rates also continue to create demand as out of work entrepreneurs seek to invest in new businesses.

"Lack of available financing is consistently named as one of the top reasons for a slow recovery by our audience of leading business brokers," Handelsman said. "As buyers find more ways to fund their business acquisitions, we expect the increase in business transactions to continue."

Continued Growth Expected for Rest of 2012

While valuation multiples dropped in Q1, median revenue for sold businesses grew from $346,000 to $360,000 compared to the same quarter last year. As these financials continue to improve, owners may finally have the confidence that their business is healthy enough to sell. Also, with many Baby Boomers reaching retirement age, the latent supply held over the past couple years could hit the market in the remainder of 2012.

2012 Q1 Key Financials for Sold Small Businesses

"There are certainly small business owners who have been biding their time since the recession hit in 2008," Handelsman said. "With better financing available for buyers and a larger supply of businesses ready to hit the market, we may finally have the right conditions for a more significant bump in the number of closed transactions.

About the BizBuySell.com Insight Report

BizBuySell.com is the Internet's largest marketplace for buying or selling a small business. The company releases its BizBuySell.com Insight Report on a quarterly basis, reporting changes in closed transaction rates, valuation multiples and other economic indicators for the small business transaction market. Closed transactions are reported to BizBuySell.com by business brokers nationwide.

Media Contact:

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

Appendix: Additional Statistics from Small Business Transactions Reported to BizBuySell

2012 Q1 Small Business Sale Price vs. Asking Price

2012 Q1 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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