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Sellability Tracker: Worldwide Trends In The Liquidity Of Privately Held Businesses

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Courtesy of Forbes.com, John Warrilow, Contributor

We’ve recently analyzed the latest data from users of The Value Builder System and the findings present an interesting snapshot of privately held business values.  Below are some of the highlights:

Sellability Tracker Infographic - The Value Builder System
We analyzed data from over 25,000 users of The Value Builder Score from around the world between July 1, 2012, and September 30, 2016. The majority of participants were from the United States, the United Kingdom, Canada, Australia and South Africa. Findings are considered accurate +/-0.81% 19 times out of 20. Photo credit: Visme.co

 The Business Liquidity Index (BLI) has fallen to 90.8 down from 105.8 last quarter.

Each quarter, we measure the proportion of business owners that received an offer to buy their business and express the proportion as an index, 100 being the average. The BLI rose from 81.8 to 105.8 for the quarter ending June 30, 2016, but has fallen to 90.8 for the quarter ending September 30, 2016, showing that, compared to the previous quarter, a lower proportion of business owners have received an offer to buy their business.

 Average offer multiple slips to 3.435 times pre-tax profit.

Moving in lockstep with the BLI, the average offer the users of The Value Builder System received in the last quarter has slipped from 3.8 times the pre-tax profit in Q2 of 2016 to 3.435 in Q3, 2016. The BLI and average offer multiple usually move in the same direction, since very active markets tend to drive up offer multiples and when fewer offers are made, multiples go down.

Our latest analysis includes data from more than 25,000 users of The Value Builder System from around the world. Of the business owners surveyed, 96% had revenue (annual turnover) of less than $20,000,000, while 4% had revenue in excess of $20,000,000. Findings are considered statistically accurate +/-0.81%, 19 times out of 20.

The latest data shows a slight softening trend in the market for privately held businesses. Therefore, if you’re planning to sell your business in the next few quarters, we recommend you do everything possible to maximize its value, focusing on the eight factors business buyers care about most.

This study was conducted by the team at The Value Builder System— a cloud-based software application that allows business owners to evaluate the “sellability” of their company.  At Colonial Business Brokerage, we use The Value Builder System, which has helped more than 25,000 business owners improve the value of their company since 2012.  You can start by getting your Value Builder Score here.

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