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.
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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