By Shawn Hyde, International Society of Business Appraisers (ISBA) –
I had a conversation with an SBDC consultant recently, about transaction databases and how to best utilize an analysis of that data when valuing a business. She suggested I share this information with her colleagues in the America’s SBDC network, so here it is.
There are several different databases, each maintained by different organizations, that track transactions of privately held businesses — the prices they sold for as well as various other financial metrics for each transaction. The idea behind these databases is that one could analyze transactions of similar businesses that have sold, in order to identify an indication of value for a business. But there is more to it than simply pulling up the data for the applicable SIC or NAICS code and calculating the average or median of the data provided. (more…)