14 Sep Recent Private Business Sale Price Data
A private M&A research firm that tracks private U.S. business purchase/sale transactions in the $10 million to $250 million transaction size range – a size and type that has historically been underreported – recently released its analysis of 2015 year-to-date transactions.
As usual, size matters. Larger companies sell for higher multiples, as do companies that have management that is willing and able to remain. Interestingly, it found that companies owned by institutions sell for higher multiples, on average, than companies owned by individuals or families. One can reasonably surmise that this is because many individual and family sellers fail to execute a value-maximizing sale process. Institutions, such as private equity groups and corporations, either have M&A staffers that run the process, or hire it out. Many individuals choose to do it themselves, however. The result is a lower price.
In the first six months of 2015, the average selling multiple was 6.7 times adjusted EBITDA. Large (revenue) companies that were growing, and enjoy above (industry) average profit margins, and have proven management willing to remain, and that were owned by an institution, garnered the highest multiples – approaching 9x. Smaller companies owned by individuals or families, and that lack these attractive characteristics, sold for around 5x.
If you are an owner of a profitable company with annual earnings in excess of $500,000 and you would like to sell, we’d like to talk to you. We can help you sell quietly, professionally, for absolute maximum. Contact us.
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