Michael M. Carter says his company, BizEquity, of Devon, has built the "first and largest database" of millions of U.S. firms and the factors that enable owners, buyers, sellers and lenders to value them -- and it's just raised $5 million from investment bankers Miles Frost and Peter Brooks and their group to expand the business; U.S. media investor Herb Siegel and ex-Safeguard Scientifics boss Pete Musser are also aboard, Carter says.
BizEquity counts MasterCard, Metro Bank, Experian and Bryn Mawr Trust among its clients and partners. Fox Chase Bank and Metro Bank (Pa.) have private-labeled the service and put it online. Carter tells me he's lined up industry heavies like Michael Stefanick, svp-business intelligence/big data/commercial analytics at Equifax, to join BizEquity shortly.
Carter's idea is to put the small firms that dominate small-business appraisals out of business by offering so much data -- and regular valuation reports, and factor analysis, smartly presented, developing in realtime -- that dealmakers, banks, owners and investors will have little need to look elsewhere.
Why stop with appraisals? I asked. He ought to have enough data to make loans directly. After all, Reuters, Dow-Jones and Bloomberg all started with price lists. -- Carter laughed: Having endured the 2001 tech bust, he says he's content to build a focused data business with a long growth "runway" ahead.
"BizEquity has an impressive product that is earning a place in the valuation world," says Philadelphia investment banker Andy Greenberg, a partner in GF Data Resources, one of more than two dozen firms which collect deal data used in BizEquity's patented formulae.
"Many businesses are susceptible to algorithmic valuation," says Greenberg, especially as dealmakers rely less on discounted cash flow analysis, and more on."multiples of revenues, earnings or other metrics. Those multiples are like cap rates on real estate. They become a shorthand for industry participants, and are more easily captured and adjusted in a financial model."
Still, Greenberg adds, "However, there remain many, many businesses where the characteristics of the company, industry and/or transaction require a greater application of judgment ('Kentucky windage') to the situation." There's still room for professional judgement, he concludes.