15 / December 2010

The NY Times plugs the BV profession—and the high quality of middle market private company financial information in Pratt’s Stats

Posted in: BVWire News Written by: David
Categories: industry analysis private company transaction data
Tags: valuation research resources valuation research tools

Referring to Inc. magazine’s recent article “2010 Business Valuation Guide” Times blogger Barbara Taylor says  “it’s no secret that this is a lousy time to try to sell your business…and main street businesses have been hardest hit.” BVR’s Adam Manson told Taylor that “acquisitions are recovering more favorably for companies with revenues over $5 million.” Manson based his comment on statistics he compiled from Pratt’s Stats that didn’t make it into Taylor’s article. The tables below outline the median valuation multiples for private and public buyers from 2005 to the present.

Pratt's Stats® Median Valuation Multiples - All Industries,

Organized by Revenues and Year (private buyers only)
2005 2006 2007 2008 2009 2010

(to date)
Selling Price/Revenue
$0-$1M 0.48 0.50 0.49 0.48 0.45 0.45
$1M-$5M 0.42 0.41 0.45 0.39 0.41 0.40
>$5M 0.41 0.60 0.53 0.43 0.54 0.50
Selling Price/EBIT
$0-$1M 3.27 3.53 3.11 2.52 2.32 2.09
$1M-$5M 5.38 5.42 5.16 4.56 4.08 3.34
>$5M 5.08 5.81 7.60 5.91 4.94 6.25
Selling Price/EBITDA
$0-$1M 4.05 4.16 3.73 2.58 2.31 2.09
$1M-$5M 4.48 5.53 5.41 4.29 4.18 3.31
>$5M 4.48 4.96 6.76 4.69 4.61 5.81
Pratt's Stats® Median Valuation Multiples - All Industries,

Organized by Revenues and Year (public and private buyers)
2005 2006 2007 2008 2009 2010

(to date)
Selling Price/Revenue
$0-$1M 0.49 0.51 0.50 0.49 0.47 0.46
$1M-$5M 0.54 0.54 0.55 0.45 0.43 0.42
>$5M 0.95 1.11 1.12 0.91 0.88 1.00
Selling Price/EBIT
$0-$1M 3.31 3.54 3.14 2.53 2.32 2.09
$1M-$5M 5.83 6.05 5.69 4.67 4.20 3.63
>$5M 11.75 11.39 11.63 10.20 7.56 9.28
Selling Price/EBITDA
$0-$1M 4.06 4.16 3.74 2.59 2.32 2.09
$1M-$5M 5.94 6.88 5.70 4.62 4.19 3.56
>$5M 9.09 9.02 9.11 9.18 6.63 7.80
Taylor also quoted Toby Tatum (Alliance Business Appraisers) who stressed that the reason why businesses aren’t selling is the price. He also emphasized the importance of hiring a good appraiser —not only to give a business owner a solid valuation, but a solid consultation, too.

BVR continues to offer Inc’s graphic based on 3,666 transactions recorded by BVR from January 2007 to March 2010, as a free download here.

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