New BizBuySell.com Report Regarding Business-for-Sale Transactions Suggests Modest Economic Recovery in Second Quarter 2010

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BizBuySell.com reports rising year-over-year transaction volume and improved cash flow multiples

The market is continuing to improve, making it a good time to list a business for sale.

BizBuySell.com, the Internet's largest marketplace for buying or selling a small business, today released second quarter 2010 economic data that show increased business succession activity.

According to the BizBuySell.com Insight Report data, the number of closed transactions in Second Quarter 2010 rose significantly, 6.3 percent, as compared with the same time period in 2009 -- from 1,040 transactions to 1,106.

"It's encouraging to see ongoing recovery in the business-for-sale marketplace," commented Mike Handelsman, general manager of BizBuySell.com. "The market is continuing to improve, making it a good time to list a business for sale."

While transaction volume is up in comparison to 2009, the market remains down compared to prior years. In Second Quarter 2008, business brokers reported 2,098 closed transactions. Relative to two years ago, the market is still down 47% versus its peak.

Business Valuation Multiples Rise in Second Quarter 2010

In addition to an increase in completed deals, BizBuySell.com notes slight changes in the metrics that are used to value companies. Compared to the same quarter last year, revenue multiples declined while cash flow multiples increased, suggesting that sellers with cash flow positive businesses may be seeing more qualified buyers bidding to buy companies. This puts upward pressure on business sale prices, which is reflected in the higher cash flow multiples. Sellers are clearly valuing cash flow more than revenue, as evidenced by the decline in revenue multiples.

Specifically, revenue multiples on reported closed transactions in Second Quarter 2010 declined from 0.68 to 0.66 compared against Q209, representing a 2.3% decrease. In contrast, cash flow multiples increased nicely from Second Quarter 2009's 2.59 to Second Quarter 2010's 2.81, representing an 8.5% increase. The revenue and cash flow multiples are calculated by dividing the selling price of the business by its reported annual revenue or cash flow.

Median Sale Price for U.S. Businesses Drops

The median sale price for closed business-for-sale transactions in the United States during Second Quarter 2010 was $155,000, down from $160,000 in Second Quarter 2009. Locally, most markets are seeing lower median asking and selling prices for listed businesses.

BizBuySell.com notes that these two downward trends suggest that sellers may be getting more realistic about business valuations. The trend also suggests that smaller businesses are leading the market recovery in the business-for-sale marketplace. The credit market remains tight for acquisition financing, allowing smaller deals to get to market and close while larger deals may be more difficult to finance, thereby attracting fewer buyers and taking longer to close. BizBuySell.com expects that as financing continues to become increasingly available the business-for-sale market will continue to recover, as more expensive businesses will be listed and will experience intensifying buyer competition. As a result, BizBuySell.com expects increasing numbers of closed transactions and higher transaction prices in the future.

About the BizBuySell.com Insight Report:

The BizBuySell.com Second Quarter 2010 Insight Report includes business-for-sale metrics for the total U.S. and for more than 70 major metropolitan areas. Metrics are also available by industry and business type. The current Insight Report comprises data from 1,106 closed transactions and over 30,000 active listings.

BizBuySell.com receives closed sale data from business brokers around the country. BizBuySell.com is the most popular online marketplace for business-for-sale listings, with over 47,000 businesses for sale.
For more information on the BizBuySell.com Second Quarter 2010 Insight Report, visit http://www.bizbuysell.com/news/media_insight.html.

About BizBuySell:

BizBuySell is the Internet's largest and most heavily trafficked business for sale marketplace, with more business for sale listings, more unique users, and more search activity than any other service. BizBuySell currently has an inventory of over 47,000 businesses for sale, and more than 700,000 monthly visits. BizBuySell also has one of the largest databases of sale comparables for recently sold businesses and one of the industry's leading franchise directories.

BizBuySell was founded in 1996 and acquired by LoopNet, Inc. in 2004. LoopNet operates the largest commercial real estate listing service online, with more than $500 billion of property listed for sale and 5.7 billion square feet of space for lease. With over 3 million members, LoopNet attracts the Internet's largest community of commercial real estate professionals. For more information, visit http://www.bizbuysell.com.

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Lauren Eichmann
Walker Sands Communications
(312) 265-3089
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