Click here to download PDF version of FAQ page.

Click here to download PDF version of BIZCOMPS User Guide.

Reports	Excel® Format	Definition
N/A	TransactionID	Internal transaction ID number
SIC	SICCode	Standard Industrial Classification code
N/A	SICCodeGeneral	Standard Industrial Classification code - General category
NAICS	NAICSCode	North American Industry Classification System
Business Description	BusinessDescription	Products and services of business
Annual Gross Sales	AnnualGross	Annual gross sales ($000's), normally net of sales tax
Sale Date	SaleDate	Actual date of sale
SDE	SDE	Seller's discretionary earnings ($000's), net profit before taxes and any compensation to owner plus amortization, depreciation, interest, other non-cash expense and non-business related expense and normally to one working owner
Sale Price	SalePrice	Actual sale price ($000's), inventory has been deducted if it was included in sale price
Ask Price	AskPrice	Asking sale price of business ($000's), does not include inventory
SDE/Gross Sales	SDEToAnnualGross	Seller’s discretionary earnings divided by gross sales
Sale Price/Annual Gross Sales	SalePriceToAnnualGross	Sale price divided by gross sales
Sale Price/SDE	SalePriceToSDE	Sale price divided by seller's discretionary earnings
Percent Down	PercentDown	Down payment as a percent of sale price
Terms	Terms	Terms of primary new or assumed loan
Inventory Value	InventoryAmount	Inventory at the time of sale($000's)
Furniture, Fixtures & Equipment	FFE	Estimate of value of furniture, fixtures & equipment ($000's)
Value Of Real Estate	ValueOfRealEstate	Value of real estate included in sale but excluded from Sale Price
Rent/Annual Gross Sales	RentToAnnualGross	Yearly rent divided by annual gross sales
Area	Location	Region or geographical location of business
Days On Market	DaysOnMarket	Actual number of days business was on market
Franchise Royalty	FranchiseRoyalty	Actual royalty less advertising percentage
Number Of Employees	NumberOfEmployees	Number of employees

N/A = Not Available

All sales are assumed to be asset transactions, and exclude cash, accounts receivable, accounts payable and inventory. FF&E (furniture, fixtures and equipment) is included in the sale price. Sale prices are face values (not adjusted to cash equivalent).

The BIZCOMPS® studies of small business sales were initiated in 1990 to investigate and report financial information about small business transactions in the marketplace. Historically, market data on small business transfers has been virtually nonexistent, leaving the investor or advisor to speculate about the fair market value of the enterprise. The BIZCOMPS® studies remove the marketplace uncertainty and provide the reader with detailed, meaningful financial information about these "real world" transactions.

Small business transaction information is not readily available because it is not required to be publicly reported. In the absence of reliable data, investors, appraisers and brokers have attempted to develop universal valuation formulae or "rules of thumb" to set guidelines for appraising small businesses. These generalized "formula" approaches are chastised in most valuation literature and are a poor substitute for comparable sale data. A careful analysis of the BIZCOMPS® database provides market-based comparable sales information and eliminates the need to rely on rule-of-thumb formulae.

The Studies

The objective of BIZCOMPS® is to accumulate reliable comparable business sale information for entrepreneurs, investors and advisors trying to estimate the fair market value of small businesses. The studies are geographically segmented to provide reliable, comparative data that is regionally discriminated. Since business values are affected by external economic forces, it is important to analyze sale data by region.

The BIZCOMPS® Study collects and reports the most relevant financial information available on small business transactions in the United States. Because the information is not required to be publicly reported, BIZCOMPS® obtains its financial information from business brokers and transaction intermediaries. These financial consultants are considered to be reliable and disinterested and their valuable input provides the basis of the BIZCOMPS® Study.

BIZCOMPS® reports all financial information available on each reported transaction without excluding any particular class or type of business. Note that all included businesses were reported by business brokers and, of course, actually were sold. This fact may establish some financial parameters for "sale ability" by a business broker. Specifically, the ultimate sale price of a business sold should be from thirty percent to one hundred percent of gross revenues and from 1.5 to 3.5 times Seller's Discretionary Earnings. This generalization would exclude service stations and travel agencies.

BIZCOMPS' philosophy is to present as much information as possible so that the user can selectively analyze the data based on individual need. For that reason, all sales are shown as asset transactions and do not include cash, accounts receivable or accounts payable. Inventory has also been excluded but the actual amount of inventory at the time of sale is shown for each business sale.

The exclusion of inventory from the financial averages requires further discussion. In business sale transactions, inventory transfers at the date of closing based on the wholesale cost of "good" inventory existing at that date. Since the amount of inventory can vary so significantly from business to business, BIZCOMPS® believes that the financial ratios of the selling price of a business should exclude this relatively volatile asset. Also, there may be external reasons to manipulate the amount of inventory at the time of closing that, if included, would distort the selling price of the business. If it could be assumed that the "optimal" level of inventory was included in every business sale transaction or that the aggregate statistics would produce the optimal level of inventory, then inventory could be meaningfully included. The author does not believe this is a safe assumption, and therefore inventory is excluded from the statistical averages.

Types of Financial Information Reported

For each business transaction surveyed, the BIZCOMPS® studies report a number of items of financial and other data. Specifically, the survey includes the type of business, the SIC (Standard Industrial Classification) code number, the NAICS (North American Industry Classification System) code number, the date of sale and the location of the business. The survey includes the asking price, the sale price and the terms of sale. Financially, the surveyed information includes the annual gross revenue, the seller's discretionary earnings
(SDE), the amount of inventory, the amount of furniture, fixtures and equipment and the rent as a percent of sales. Of course, the sale price of the business is included and, from it, the sale price as a percent of gross revenue ("Gross Revenue Multiple") and the sale price as a multiple of the seller's discretionary earnings ("SDE Multiple") can be calculated. In a survey of this type, all of this information is important to the user and must be presented in detail for the survey to be significant. The author believes that the user must have access to all of this data, in a fully published form, to be able to meaningfully analyze the information.

The last comparison is by rent paid as a percent of Gross Sales. This important indicator has a lot to do with the profitability and hence the desirability of each individual business. For instance, liquor stores, because of their competitive nature, are particularly sensitive to rent. In general, only exceptional businesses can afford to pay rent that is more than 10% of Gross Sales. Liquor stores should pay rent equal to 5 or 6% of Gross Sales. If a mature business has a rent expense greater than 10% of gross sales, it is usually a less profitable business. For this study, contributors supplied rent information on over fifty-eight percent of the business sales reported. Hopefully, that ratio will continue to improve in coming studies.

The FF&E value should be adjusted to Fair Market Value in Place. However, since these assets are never sold separately, there is no assurance that this adjustment has been made. The FF&E value used could be book value, the owner's estimate, the broker's estimate or, in some cases, even new cost. For this reason, while the FF&E value is useful in most cases, we suggest caution when using it. On the other hand, you can have a great deal of confidence in the inventory value. A physical inventory is almost always taken at close. These are the only two asset fields in the BIZCOMPS® database.

All of the Canadian transactions in BIZCOMPS® are being reported in Canadian Dollars. The BIZCOMPS® advanced search page allows the user to search by Country field, but United States is the default. To search for Canadian transactions only, simply select “Canada” in the Country field. To search for both United States and Canadian transactions, select “all.”

The sales and SDE numbers used in the BIZCOMPS® database are generally the most recent 12 month period. There may be a few cases where the numbers are annualized. i.e. There may be 8, 9, 10 or 11 month "profit and loss statements" that are annualized to make a 12 month period. In any event, the numbers have been through a book check or Due Diligence by the buyer and his or her accountant. Buyers generally are not comfortable making a purchase decision based on "forward figures" even though the most important criteria is what the business will do in the next few years.

The Coefficient of Variation = Standard Deviation / Mean (mean is the same as the average)

The Coefficient of Variation is a measure of dispersion around the mean (average).

The theory is that the valuation multiples with the lowest Coefficient of Variation are those with the least dispersion around their respective means and may be the better indicators of value. The value derived using these valuation multiples may be weighted more heavily than those with larger Coefficient of Variations.

Generally, the highest paid partner's compensation is added back and the lesser paid partner’s compensation is normalized. Typically, brokers who sell businesses try to indicate the highest earnings available to one working owner

In almost all cases you can expect the loan to be fully amortized. That is the standard way these businesses are purchased.

(2) is the correct answer.

Non-Compete and Consulting Agreements are included in the sale price; if there was something negotiated on top of the sale price, it would not be included. Land and Buildings are both excluded from the transaction information and rarely happen.

All that is included in BIZCOMPS® transactions is Fixtures & Equipment and Goodwill. There is no assumed debt. The businesses are considered to be debt free at the time of sale even though there is often new debt created by the transaction.

The BIZCOMPS® sale price represents an Market Value of Invested Capital (MVIC) price. If one were to apply a BIZCOMPS® selling price multiple to their subject company, they would subtract the subject company's liabilities from the resulting number to arrive at an equity value. For more information, see the section in the BIZCOMPS® User Guide titled Converting a BIZCOMPS® Asset Sale to an Equity Value.

Generally, all assets necessary to generate the Discretionary Earnings are included in the sale of a business. Liquor licenses are simply another required license the same as a business license. Occasionally, there may be special circumstances when a license is sold by itself or licenses in an area that limits licenses or special unlimited licenses that permit other activities without limitation. However, it is unlikely that a buyer would pay anymore for that license than what the business profits would dictate. There are also cases where a buyer intends to do something completely different with the license like move it to another location, etc. Part of a business appraiser's duties would be to analyze such situations and apply an appropriate premium if warranted.

The database does not report or know the value of the individual licenses. One option is to value the license separately as an intangible asset. Try to develop an independent value for the additional earning power or eventual resale of that specific license. Or, contact local brokers that are specialists in selling licenses to see if they can provide useful information.

In a boat rental business, the boats would be considered Fixtures and Equipment. That value is included in the Sale Price. In a few cases there are businesses like the one you mentioned that also sell boats. Those businesses sometimes rent saleable inventory. But in general, the first statement is correct. The sale price includes Fixtures & Equipment and Goodwill. That is all that is included in the sale price. The Fixtures & Equipment are one of the assets necessary to generate the revenue the business eventually turns into profit and are rarely sold separately in a profitable, ongoing business.

The Web site's search engines use the underlying data to create the list of SIC codes. If your SIC code is not listed in the search engine, this means there are no transactions with that SIC code in the selected database. You may want to search the other databases to see if they have any helpful data. You can search all databases at the same time, by SIC code, by either clicking here or selecting the "Search All" menu option at the top left. The results of this search engine will display the number of transactions contained in each BVMarketData database. If you click on each databases' representative number, the Web site will display a summary of the data in that database. If you are a subscriber to the selected database, the Web site will display the subscriber search results. If you are not a subscriber to the selected database, the Web site will display the visitor search results.

Assuming you are using Microsoft Internet Explorer, please do the following:

• In Internet Explorer, go to the Tools/Internet Options menu
• On the General tab, in the Temporary Internet Files section, click "Delete Files"
• On the General tab, in the Temporary Internet Files section, click "Settings"
• If it is not already clicked, click the "Every visit to the page" radio button, then click "OK"

Below, we show the term used for the “selling price” in each BVMarketData.com database and its respective definition:

Pratt’s Stats® uses the term MVIC (Market Value of Invested Capital) for the “selling price.” The MVIC is the overall consideration in the business sale and includes any cash, notes and/or securities that were used as a form of payment plus any interest-bearing liabilities assumed by the buyer.

The Mergerstat/Shannon Pratt’s Control Premium Study™ also uses two terms for the “selling price”; the Target Invested Capital (TIC) and Price. The TIC is the target company's implied total invested capital based on the sum of the implied market value of equity plus the face value of total interest bearing debt and the book value of preferred stock outstanding prior to the announcement date. The Price is the implied market value of equity.

BIZCOMPS^® uses one term for the “selling price”; Sale Price. Sale Price is the actual sale price ($000's) where inventory has been deducted, if it was included in the sale price.

Public Stats™ uses the term MVIC (Market Value of Invested Capital) for the “selling price.” The MVIC is the overall consideration in the business sale and includes any cash, notes and/or securities that were used as a form of payment plus any interest-bearing liabilities assumed by the buyer.

The FMV Restricted Stock Study™ does not report details on the sale of either a portion of a company or an entire company and therefore does not contain a selling price field. Instead, this database reports the details related to transactions in restricted stock. This database does report a Market Value (in $000s) which is the market value of the firm determined on a pre-deal basis. The market value is calculated by multiplying the shares outstanding before the private placement with the high-low average market price for the stock for the month prior to the transaction. The market value is not the selling price, per se, but a calculation of the value of the total equity on the date of the restricted stock transaction.

The Valuation Advisors’ Lack of Marketability Discount Study™ does not report details on the sale of either a portion of a company or an entire company and therefore does not contain a selling price field. Instead, this database reports the details related to transactions in common stocks, stock options or convertible preferred stocks prior to an initial public offering, and the relationship of these prices to the IPO price per share (the price of the stock paid by the initial public investors to acquire their shares).

Yes, sale details on publicly traded companies (valuation multiples for publicly traded companies can be found in the Public Stats™ database and the Mergerstat®/BVR Control Premium Study™) can be used to value a private company. The indicated value utilizing the sale of an entire public company will result in a control value. It normally would not be appropriate to add a control premium. One or more discounts may be appropriate, depending on the valuation assignment. For more details, see The Market Approach to Valuing Businesses by Shannon Pratt (New York: John Wiley & Sons, 2001. p. 39).

Some of our subscribers impose a separate resource/technology charge for every valuation assignment. They know approximately how many appraisals they do per year and divide that number into the [annual] costs of the databases and basic data resources they use, thereby passing along the resource (or technology) charges.

To print a group of transactions (the current group size is 10); on the search results page in the list of transactions, utilize the icon that looks like a red piece of paper – it is labeled “Print Detail Report Package”. When printing more than a couple of detailed transaction reports, this will save you time.

The best solution is to maximize your print margins. In Internet Explorer the default margin size is 0.75 inches. When you print transaction reports, reduce the print margins to 0.25 inches and most will fit on a single page. Also, you should remove any header/footer information that Internet Explorer includes in web page printouts. The print margins and header/footer settings can be found under File -> Page Setup in Internet Explorer.

Click here for an explanation.

By pressing and holding down the LEFT mouse button, you can highlight a series of SIC codes (either by two digit SIC codes, three digit SIC codes or any series you want [all of manufacturing, for example]).

By holding down the CONTROL button on the keyboard (and clicking with the LEFT mouse button), you can highlight a noncontiguous group of SIC codes.

Check your browser version and update to the latest. Also, check if you have some sort of pop-up window blocker, you need to disable the pop-up window blocker.

Some of the more advanced pop-up window blockers will allow you to customize the specific pop-ups you would like to allow. Otherwise they will need to disable the program in order to view the printable format.

Some pop-up blockers can be temporarily disabled by holding the "Ctrl" and "Alt" keys on the keyboard when you are attempting to allow pop-ups.

Currently the Excel Export feature on BVMarketdata.com is only supported in Internet Explorer. The Excel Export uses VBScript which is only supported in Internet Explorer. We are in the process of updating the export function to be compatible with other web browsers. An alternative would be to use the Email to Me option which will email the data to you in a comma separated file.

This typically happens when the subscriber is using a pop-up blocker. To bypass the pop-up blocker, press down on either your “Shift” or “Control” key (try both) prior AND during clicking on the Excel Format button – this should bypass the pop-up blocker. If you are able, you may also add www.BVMarketData.com as a “trusted” site in your pop-up blocker program – this would negate the need to hold down your Control button when you next use the Excel Format button.

If you are using Outlook to browse the internet, you may experience this problem. Apparently web browsing within Outlook has problems passing data from one page to another. To solve this, exit Outlook and use Internet Explorer to access our website.

Another possibility is that you may have a pop-up blocker that is preventing the new window from appearing. To solve this, disable your pop-up blocker by (1) turning the pop-up blocker off until you are done exporting the data (2) holding shift, control, or alt (dependant on your pop-up blocking software) which allows you to temporarily allow pop-ups while the button is pressed, and then reverts to blocking pop-ups once the button is depressed or (3) find the options or settings on your pop-up blocker and choose to allow pop-ups from our website.

Make sure your are using the most recent version of Internet Explorer for Mac. Here's a link to download the most recent version of IE for Mac.

http://www.microsoft.com/mac/download/default.asp#IE

If you are running Office 2001 for Mac, make sure you have the latest version. Click the link below to download it and install it.

http://www.microsoft.com/mac/downloads.aspx#office2001 and click on Microsoft Office 2001Combined Update 9.0.4

If you have any further questions please contact the Webmaster via e-mail at: nathans@bvresources.com or phone at 888-287-8258 and ask for Nathan.

If you are having trouble viewing the Excel exported data from BVMarketData.com^sm and are using Excel 2000 (other versions of Excel have not exhibited this problem), please read the following.

In the original version of Office 2000 there was a bug when passing Excel data over the web. This problem was fixed in a service pack released by Microsoft. Once you install this service pack update on your computer you should not have any trouble viewing the Excel data from BVMarketData.com^sm.

To update your Office 2000 to the latest service pack release, please locate your Office 2000 CD or Excel 2000 CD and then visit the following web site at Microsoft.com:

http://office.microsoft.com/ProductUpdates/default.aspx

At the top of the page click on the following link:

Check for Updates

You will then be taken through a process of updating your Office 2000 install on your computer. This will update your Excel application as well. During the install, it will ask for your Office 2000 CD.

If you have any questions please e-mail Nathan Struk at: nathans@bvresources.com

Address comments or questions about BIZCOMPS^® to:

BIZCOMPS^®
P.O. Box 711777
San Diego, CA 92171
Tel: (858) 457-0366
Contact: sanders@bizcomps.com


Last updated: 2/25/2010