Businesses Selling at Highest Prices

A study by a mid-market M&A (Mergers & Acquisitions) specialist found pricing significantly on the uptick during 2004 to reach the highest levels since the late 1990s. The data reported by Brown Gibbons Land & Co. suggested that buyers, cautious since the 21st Century began, were willing to pay up for targets with demonstrated cash-generating abilities and that quality sellers could demand and get more.

Chris Mercer of Mercer Capital, a leading business valuation author whose company is one of the largest independent valuation firms with an expertise in financial institutions, in his December 2004 newsletter stated: Without question, 2004 witnessed substantial M&A activity, as the aggregate transaction value rose to a level not experienced since 1998.

George Abraham, president of Business Evaluation Systems says: From our own records, many industries did rise in value and the amount of companies we valued for contemplation of sale rose dramatically in 2004. From our own research, we feel that the lowest level was 2002 and the growth activity, in our company, started in September of 2003, and has been building steadily since then.

Mr. Abraham continues: Consistent with our in-house research, the February 2005 edition of Inc. Magazine, in its Small and Mid Market M&A Activity Rose in 04 article stated Both the volume of deals and their value rose sharply, according to Mergerstat, a M&A research firm based in Santa Monica, CA. Through the first three quarters of 2004, Mergerstat reported the closing of 3,394 small or mid-market deals…40% jump over 2003. Equity valuations surged ahead by 68%…a return to the level of activity seen prior to the dot-com meltdown.