As certified Value Builder System advisers we are pleased to provide you with access to the latest global data on private business trends.
In this post we bring you the key findings from the Value Builder System’s latest Sellability Tracker report.
The Sellability Tracker is a quarterly study which tracks worldwide trends in the liquidity and value of private businesses. The latest Sellability Tracker report analysed data from over 23,000 users of the Value Builder System from around the world for Q2 of 2016.
The most important trend in last quarter’s Sellability Tracker was a strong rebound in the Business Liquidity Index and average offer multiples from record lows in Q1 of 2016.
Here are the key highlights:
Strong rebound in the Business Liquidity Index
Each quarter, the Sellability Tracker measures the proportion of business owners that received an offer to buy their business and expresses that proportion as an index, 100 being the average (the Business Liquidity Index).
The Business Liquidity Index rebounded strongly from 81.8 to 105.8 for the quarter ending 30 June 2016, showing that, compared to the previous quarter, a much higher proportion of business owners received an offer to buy their business.
While the rebound in the Business Liquidity Index is encouraging for exiting business owners we will be watching closely to see if it is maintained over coming quarters.
Average offer multiple improves to 3.75 times pre-tax profit
Moving in lockstep with the Business Liquidity Index, the average offer users of the Value Builder System received in the last quarter increased from 3.55 times pre-tax profit in Q1, 2016 to 3.75 times pre-tax profit in Q2, 2016.
Ability to scale matters
The Sellability Tracker for Q2, 2016 again confirms that businesses with a strong capacity to scale quickly attract much better offers from potential buyers. For Q2, 2016 business owners with highly scalable businesses attracted average offers of 4.56 times pre-tax profit compared to the average of 3.76.
Strong social media credentials add value
The Sellability Tracker for Q2, 2016 reinforces that businesses with strong social media credentials also attract much better offers from potential buyers. For Q2, 2016 businesses with strong social media credentials attracted average offers of 4.73 times pre-tax profit compared to the average of 3.76.
The latest Sellability Tracker shows improving trends in the market for business owners looking to exit. It also provides further confirmation of the importance of focusing on the eight Value Builder System value drivers to build exit value in your business.
For a full copy of the Sellability Tracker report for Q2 of 2016 click here.