BizBuySell.com report an increase in Business For Sale Transactions

Bizbuysell.com released their statistics for the first quarter of 2010, and the good news is that the number of closed transactions increased .3% as compared to the same time period in 2009, and an increase of 6.3 percent over the final quarter of 2009. Bizbuysell measures small business sales.

GF Data Resources has also released data from the fourth quarter of 2009 that tracks middle market deals. They found that the average purchase price multiple in the fourth quarter was 5.2x trailing twelve-month adjusted EBITDA. This was up slightly from the third quarter of 2009.

Business for Sale Market starting to become unglued

This shows that the market is beginning to become unglued, and transactions are taking place. On the other side though, valuations are not improving. The Bizbuysell showed that the revenue multiples on closed transactions during the first quarter in 2010 fell from 0.69 to 0.64 compared against the first quarter of 2009, and the median sales was $150,000, down from $165,000 in the first quarter of 2009.

These studies point out what most are seeing in the marketplace. Business sellers are becoming impatient in their quest to hold out for better prices. Buyers are seeing less risk in the overall economy, and therefore willing to dip their toe in the water. Whereas this data is certainly a positive, and things are going in the right direction, to make it sustainable we need to have the valuations increase. This will only happen after we see an active market with competitive bidding.