More sales of businesses mean more valuations need to be done, so some recent statistics from the business marketplace should be good news for valuation experts.
Small business transactions jumped 61.8% in the second quarter of 2013 as compared to the same period of 2012, according to a report from BizBuySell.com, which aggregates business-for-sale transactions reported by participating business brokers nationwide. This is the largest year-over-year jump since small business sales bottomed out in mid-2008. These results build on a 55.7% increase in the first quarter of 2013, meaning the market is gaining steam.
Multiples on the rise: Sale price multiples have started to increase, says the report. For example, the average sale price as a multiple of cash flow had been on a steady decline since the start of 2011 but started to reverse itself in Q1 2013, rising to 2.23 for Q2 2013.
The reasons for the turnaround are a recovering economy, an aging business owner demographic eager to sell, and an increase in the number of qualified buyers, who had been hesitant because of an uncertain economy or lack of acquisition financing.
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