The International Business Broker's Association

The International Business Broker's Association (IBBA) has been providing high quality professional education and certification of intermediaries (busienss brokers) for decades. The CBI (Certified Business Intermediary) designation should be the standard you seek to find the right person to assist in any ownership transfer. Good advisors add value...and will address each situation in the manner needed to achieve that end. Sometimes this may be strictly a consulting assignment when the parties require only a certain specific level and limited group of services.

The statistics show that only 1 or 6 businesses are actually sold of those offered to the market in the general business area (business with transaction values < $1M)... in the middle market, where we have worked since the 1980's, the stats are still poor...1 or 3. Good professional respresentation on both sides of transaction can make a significant difference in improving on these statistics and in completing a business sale in a timely manner with balanced terms at a reasonable price based on market conditions and exposure. (When engaging a transaction advisor, you should inquire about these and other stats and speak directly to prior sellers as well as their legal/accounting advisors in those deals.)

The interaction on this thread regarding pricing multiples appears to be based on adifference of definitions of "income" or "earnings". In the middle market earnings are measured and discussed based on EBIT (Earnings before interest and tax) adjusted to economically derived markets expenses for compensation,etc. Multiples vary based on the type of business (service/manufacturing/etc.), growth patterns, etc....but fall primarily into a 4X to 6X band for transactions in the $3M to $30M price range.

Smaller businesses's earning power is normally stated as SDE (Seller's discretionary income)...which is EBIT + all depreciation/amortizaion + the Seller's compensation and benefits. The "multiple" on this much different earnings base is often in the 1X to 3X range for these smaller business due to the nature of the operations. (Note: Deduction of the owner's compensation and benefits at market rates from SDE will move this multiple toward those found in the middle market.) In all cases, the new owner must be able to project a return on the investment of capital sufficient to take the risk and management responsibility of business ownership. In the end: All value is based on a prophecy of the future! ...all transactions require this meeting of the minds based on knowledge and anslysis which can be facilitated by good, professional advisors.