What is the most comprehensive precedent transaction database for the lower mid-market?

August 26, 2021

by a searcher from University of Toronto - Joseph L. Rotman School of Management in Toronto, ON, Canada

I'm looking for private company precedent transaction data for the lower mid-market to use in my valuation assessment. I have yet to find a data provider that has comprehensive private market data without a tonne of gaps in the data sets. Any recommendations? (This would be primarily for the North American market)

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Reply by a professional
from University of Southern California in North Palm Beach, FL, USA

Thanks for tagging me, ^redacted‌. I hope this is helpful: First the bad news: Perhaps, depending upon the company size and its industry, most of the businesses for sale are not going to appear in the publicly available databases. It’s partially because business brokers are the source of most of the data submissions, and brokers don’t represent all the sellers.

Having run a national appraisal company for 20 years and my consulting practice for more than 30 years, all specializing in the buying and selling of small and midsize businesses, my experience is none of the databases provide enough information to give the most discriminate inquirers the information they need to know; data that is based on similar transactions and a large enough population sample.

This is why there is an appraisal industry. It takes special expertise to know how to value lower middle market companies. It’s not for do-it-yourselfers.

I realize most people are going to use their own judgment, perhaps augmented by some of their advisory team.

My advice is to determine what return on investment you expect, and then make offers accordingly, keeping your eye on what others are telling you about what a particular company is worth to an intelligent buyer.

Reply by a searcher
from Harvard University in Houston, TX, USA

Not sure how you are using the data but for EBITDA below $2M the info in any database becomes incredibly poor (obviously depends on the industry). Combined with the answers already given, a not so obvious way of evaluating the multiples in a given industry is to speak to owners. Especially if they are larger players, many times they will be very candid as to what they would pay for an acquisition. The smaller guys who are within range will many times tell you over the phone what values they have heard or they expect. We have found that simply having lots of phone calls and being brave about asking blunt questions tends to give us the best response as to a valuation range for the lower end of the market.

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