How to Find Out How Much a Business Sold For?
If you know how to find out how much a business sold for then you can compare this figure to your own business and perhaps get a true value of it. We can use it to value other businesses in the same sector and if those companies have shares available to buy then we can easily arrive at a “true” value of their share price. And it’s also great if you are simply just a bit nosy.
The good news is:
- For publicly traded companies, as in those that are on the stock market, that information can be found relatively easily.
- Details for private sales are just that, private, at least in the USA. In the UK and Ireland for example you can find this information for a small fee.
- There are a lot more resources available for finding results of commercial real estate sales.
We will look at all these plus a few more resources to help you.
Publicly traded companies are legally required to disclose this information and can face severe penalties if they don’t.
For some of the bigger sales this could be headline news and can actually be hard to avoid, we will look at Elon Musk’s purchase of Twitter in 2022 as an example later.
For smaller deals we need to search for the documents that are legally required to be filed as these deals must be disclosed to the public/shareholders at some point.
However for sales of private businesses this private data remains private. You may be able to piece together some information but the best you can hope for is to arrive at your own figure, but we will take a look at methods and information out there that can help you.
I don’t know about you, but I certainly wouldn’t want the whole world knowing how much I paid for a business, so I guess this is fair enough.
First let’s look at publicly traded companies, companies like Microsoft, Bank of America or Pfizer, the companies you see traded on the stock market.
How to Find Out How Much a Publicly Traded Business Sold For?
These companies will file their documents to the SEC and each of these documents has a code depending on the type of filing it is.
There are only a few forms we need to become familiar with in order to find out how much a business sold for and with some time and a bit of practice you will be able to scan their SEC entry using the EDGAR online system very quickly in order to get the information you need.
A publicly traded company must file any “relevant information”. What is this relevant information? Well here is where lawyers can have a field day.
The Levinson test that defines information as material if “there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision” so an acquisition, when one company buys another, could certainly apply here.
Important Documents on SEC EDGAR to Find out How Much a Business Sold for
The first form that we look for a company on EDGAR is the 8-K which announces major news to shareholders, and this can include acquisitions.
The 8-K is broken down further into items, we need to look for:
Item 1.01 which sets out the plan for acquisition.
Item 2.01 if certain conditions are met, then more information will be disclosed.
So scan for item 2.01 in the 8-K.
Finding out How Much Twitter Sold For in 2022
So let’s take a look at probably the most
hilarious interesting acquisition of 2022, Elon Musk buying Twitter and see what we can find on EDGAR. We use "Search for Company Filings".
Using "Company and Person lookup" search for Twitter.
Click on "Twitter Inc" and this is what I saw
And we can immediately see an item 1.01 and item 2.01 in that 8-K filing on the right, so let’s take a look at them.
Here we can see that it is $54.20 per share agreed price in the item 1.01.
We now need to find out the number of outstanding shares to get a purchase price for the company.
Total Outstanding shares
= Preferred shares outstanding + common shares outstanding – treasury stock
A simple way is to look on yahoo finance for the ticker.
However this is a secondary source, the primary source will be on the SEC website, and we will find this on the balance sheet which will be part of the 10-Q which is the quarterly statements, or the 10-K which is an annual statement.
We will use the most recent 10-Q filing which is the July 26th 2022 one.
We then need to go to item 1 which contains the balance sheet
How to calculate outstanding shares
Find the “shareholders equity” section in the balance sheet, it will probably be in item 1 or at least close to the top
Here you can see "none issued" for Preferred shares, these shares mean you have voting rights and 2 figures for common stock.
So we have 0 + 799,384 = 799,784
Finally look for treasury stock, which is the number of shares the company has bought back from shareholders. Subtract this from the total above.
Again we have 0 treasury stock.
That means our total is 799,784
However, scroll further down to "Consolidated Statements of Stockholders Equity" and you can see this value is in Thousands
Threfore our final calculation:
799,384,000 * $54.20 = $43,326,612,800 is the purchase price of Twitter, $43.33 billion
From the wiki entry on the "Acquisition of Twitter by Elon Musk" they link to this article from Bloomberg which says $43billion
Therefore I think our method here is accurate.
However some news outlets slightly change the figures over time here they called it $46.5 billion which is $44 billion plus closing costs.
Not all acquisitions make headline news, so by following this process and reading through the filings on EDGAR you can work this out for yourself.
Other Ways to Find out How Much a Business Sold For
Sometimes companies will make it easy for you to find out how much a business sold for by providing a press release or blog post on their own website about businesses they buy.
If this is a publicly traded company then you can always investigate this further and verify this data by using EDGAR as shown above.
This information will be on their blog, or often in their investor relations section, which is probably in their about section.
Likewise a company may announce a purchase of a business on social media, Twitter is arguably the best for this.
Reddit can also be a good source for company information, the company, even if it is a small one might have its own subreddit. For example I occasionally follow Eighty Eight, EEENF.
It is regarded as a pennystock but occasionally over the last few years its price rocketed and there was a quite a bit of exhuberance about it online especially on its own subreddit.
That subreddit has a huge amount of information and documents that are hard to find anywhere else. The danger of these subreddits is that they can become an echo chamber for certain viewpoints and objectivity can be lost. So tread carefully.
Private Businesses such as Limited Liability Companies LLC
In the USA an LLC must file with the IRS, not the SEC, but this data is private and not public.
However, in Ireland and the UK this data is public.
In Ireland all limited companies, that is limited liability, or Ltd so the same as an LLC in the USA, must file annual returns and other relevant documents and these are available to the public.
However, unlike the SEC they are not free and you pay approximately €2.50 per document.
Also because Ireland
is a corporate tax haven has a highly educated workforce many of the world’s biggest companies have a presence here, especially tech and big pharma such as Intel, Microsoft, Google, Linkedin, Facebook, Apple, Amazon, GSK, Pfizer for example.
This information is available on CORE and when you search for “Facebook” there are a bunch of different holding companies, which are private,
You can nose around their finances for €2.50 a hit.
Again if you become familiar with the various forms and financial statements and know what you are looking for you can find out how much a business sold for or what another business paid for a business.
Some websites exist where you can search for a person and see what companies they are a director of, then go onto CORE to dig deeper, so it’s not just publicly traded companies like Facebook, you can find information on Mom and Pop businesses too.
I feel that the €2.50 charge puts people off from casually getting these documents, so it is a good service. If you want to fully research a company, you could end up spending €30 or €40, but for certain purposes it is well worth it.
In the UK these filings are all made to Companies House, which is run by the UK government. And you can search for documents similar to the Irish system.
Here you can get some details about a company for free, including:
- company information, for example registered address and date of incorporation
- current and resigned officers
- document images
- mortgage charge data
- previous company names
- insolvency information
Then similar to the Irish system you usually pay 1 pound for more useful documents.
Determining the Value of a Business
If you cannot find out how much a business sold for there are only a few ways to determine the current market value of a business. Each has its share of pros and cons but this may be the only option available to you.
Comparable Business Sales
One of the simplest and easiest ways to determine how much a business is sold for is by looking at the recent sales of companies similar to the business. This can be hard to track down though and may not be accurate. You have to compare apples to apples.
Meaning the business you are comparing it with should be in the same location or if in other parts of the country, it should have the same demographics.
Another way to find out how much a business is sold is to add up the value of its assets. It is not hard to generate the values of tangible assets like inventory, equipment, and fixtures.
What is hard to determine are the intangible assets - brand recognition, contracts, and intellectual property. This method also does not take into account the future earnings that the business will generate.
Aside from the first two, you can also use industry calculations. It typically expresses the value in multiple annual profits and sales. It varies from industry to industry and takes into consideration the account collections, billings, inventory, and other metrics.
In general, the average asking price is 0.6 multiplied by the annual revenue.
Return on Investment
This method of determining the value of a business hinges on the thought that a business is like a black box with an output.
The output is the return on investment. It does not matter what your business is, what is important is the annual net profit minus the probable salary and all other expenses.
It may look like the most objective valuation method but it remains subjective. The buyer may not be able to replace the people behind the success of this business.
There is an improvement in the ROI approach called EBITDA or earnings before interest on taxes, depreciation, and amortization.
This approach adds back into the valuation the items that are not actual cash outlays like amortization and depreciation.
It also includes the money that is not paid outright during the purchase of the business like debt and taxes. These are obligations that are required from the business by the state.
Hiring Professional Appraisers
Professional appraisers may use some or all of the methods mentioned above to arrive at potential selling prices for the business.
An appraiser will have to weigh which is the most effective and using their own experience may apply statistical models to arrive at the numbers.
However, these appraisers do not come cheap. They may cost several thousand dollars depending on the size and complexity of the business as it will on average take between 20 and 40 hours to complete the work.
An expert appraisal can be well worth it though.
Finding the Information of a Recently Sold Business
There are some other resources which may be of use, mainly to find out how much commercial building is sold for, so the building that houses the business but possibly not the business itself. However, I believe we cannot have too much good information to help us make good decisions.
Ten to fifteen years ago, you had to personally go to the local county office and look over public records to get the information you need.
With technological innovations, you don’t have to get out of your home or office to find out how much a business is sold for. Let us go over some of the popular methods used in the US:
The website, Reonomy.com is one of the leaders in providing information on “off-market" properties. It also provides CRE insights(Commercial Real Estate) into different businesses. It was acquired by Althus in November 2021.
Its paid tools claim to connect people, property and companies.
You can find information on building-level data, contact information, and the owner's data. If you are interested, you can directly contact them and connect.
#2. Public Records
Another way to find out how much a recently sold business is worth is through public records. You can narrow down your search to a specific location and get all the necessary information.
You no longer have to visit the office in person to get them as this information is now available online. Dive into the transaction history, record of ownership, mortgage information, and many others.
You can also find the property history online through various property appraisal sites and even government-entity-run websites.
#3. ACRIS (Automated City Register Information System)
This record-keeping website named ACRIS (Automated City Register Information System) is available for Manhattan. Brooklyn, Queens, and the Bronx from 1966 to the present.
It is another commercial property resource, you can:
- Find a Property Borough, Block and Lot (BBL) or Address
- Access Deeds and Other Recorded Documents
- Create Cover Pages and Tax Forms to Record Documents
- Compute and Pay for Property Transfer Taxes
You can select the document type (Contract of Sale, then select “Deeds and Other Conveyances” for the document class. It will bring you to a specific borough. Custom-fit the date range and you will have the list of properties sold in this time frame.
#4. HCAD or Harris County Appraisal District
This is a political branch of the State of Texas and was established in 1980. It aims to discover and appraise property for ad valorem tax purposes for every taxing unit within the boundaries of the district.
Aside from that, it also provides ownership data to check if a property has recently changed hands or not. If you want to check the information, you only need to visit the information or profile page of the property.
Check the ownership history tab and you’ll see the previous and current owners.
SDAT contains the property sales record for all of Maryland counties. With a few clicks, you can easily search for your desired property. Then you can check the individual property and collect the necessary information.
#6. Larimer County Assessor
You can get the general information on property sales on Larimer County Assessor. The advantage of looking at an online county assessor is that you can narrow down your search to either residential or commercial sales by property type, city, price, or sale date.
Although it is limited to a certain county, you can customize the search for recently sold commercial establishments.
#7. Montgomery County Property Records
This Montgomery County Property Records website offers a property record search page where you can search a property by the owner, address, sales, etc. Aside from getting information on recently sold properties, you can also have detailed information on the transaction and other data.
#8. Fulton County Property Records
Another example of a county assessor website where you can get information on the recently sold business is Fulton County Property Records.
It has a quick link section on the website for property search. On its sales search page, you can filter the information you need by sale price, sale date, sale type, and others.
#9. The Library of Congress
You can also go to local libraries for electronic and print resources.
#10 The Small Business Administration
The Small Business Administration has some general information about small businesses but as we have said details on private sales are just that, private. You may have to personally conduct inquiries in person or by phone.
The Bottom Line
There are many avenues to know how much a business is sold for. There is no single best method to know the value of an enterprise. Instead, those interested should exhaust all means to find out its worth.
The good news is you don’t have to come out of your office or home to find this out. You can harness the power of researching online by going over the sites provided above and you can take our tips and strategies to find out how much a business sold for in your area or industry.