Q1 2009 Costs to Buy a Business
How Much Is My Los Angeles Business Worth?
We just received the latest Los Angeles, California business valuation data for First Quarter 2009.
Los Angeles, CA Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, Los Angeles business-for-sale listings in Q1 2009 had a median asking price of $230,000.
That compares to a median ask price of $225,000 in Q1 2008. Because the median ask price for businesses for sale in Los Angeles has risen year over year, we can conclude that many smaller firms in Los Angeles are holding off on selling.
To be clear, this is the median asking price for a business. If you want to buy a business, you may be able to buy a Los Angeles company for much less. Alternatively, some Los Angeles businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Los Angeles business. When a business owner lists a business for sale, they typically set a price that ends up being more than the eventual sale price. A sale-to-ask ratio typically might be between 0.85 and 0.90, but of course it varies considerably. Based on this metric, a business initially priced at $225,000 might sell for between $191,250 and $202,500.
Number of Los Angeles Businesses for Sale in the Dataset
The study data comprised 3978 listings in the Los Angeles-Long Beach-Santa Ana, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Los Angeles, but they are nearby and so are probably representative of Los Angeles business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Los Angeles spanned 4059 listings. The downward trend in the number of Los Angeles business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Los Angeles, CA
In the Los Angeles-Long Beach-Santa Ana, CA metro area, businesses will typically sell for 0.79 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q1 2009 in this part of the country.
In other words, a business that has revenues of $200,000 might list for $158,588. Remember, however, that this is just an average for revenue multiples in the area. Some businesses will have higher revenue multiples and others will have lower revenue multiples.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $365,000 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.83 and the median revenue for listed businesses was $360,000.
Q1 2009 Cash Flow Multiples In Los Angeles, CA
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area was 2.97.
So, a business with cash flows of $150,000 might have an asking price of $446,200. That's only if the firm complies with the local average. In practice, cash flow multiples can vary considerably from one business to another.
If you are interested in what cash flows are for a business in Los Angeles, BizBuySell.com found that the median cash flow for Los Angeles area businesses was $94,367 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.01 and the median cash flow was $92,000.
Tips for Los Angeles, CA Business Sellers
When choosing a business broker, look for a broker that can maintain confidentiality and simultaneously get you the most qualified buyers. In addition, make sure the business broker has a good track record in facilitating negotiations between buyer and seller in a way that arrives at the best possible transaction. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Los Angeles, CA Businesses
If you are contemplating buying a business or selling a business and would like to value a specific business, we suggest you try the BizBuySell.com Business Valuation Tool. You can modify the dataset that creates business valuation estimates to meet your specific criteria. As a bonus, access to the tool is very affordable -- less than $100.
More Information on BizBuySell.com's Quarterly Reports
The BizBuySell Insight Report is published every quarter. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for additional information.
Historical Data for Los Angeles, CA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Los Angeles area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Los Angeles area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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