Q1 2009 Costs to Buy a Business
How Much Is My Memphis Business Worth?
We just received the latest Memphis, Tennessee business valuation data for First Quarter 2009.
Memphis, TN Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, Memphis business-for-sale listings in Q1 2009 had a median asking price of $250,000.
That compares to a median ask price of $250,000 in Q1 2008. In spite of the difficult economy, Memphis, TN business valuations appear to be relatively stable.
Please understand that this is the median asking price for a business. If you want to buy a business, you may be able to buy a Memphis company for much less. However, some Memphis businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Memphis business. When a business owner lists a company for sale, they typically set a price that ends up being more than the final sale price. A sale-to-ask ratio typically might be between 0.85 and 0.90, but of course it varies considerably. As an example, a company listed for $125,000 would often sell for between $106,250 and $112,500.
Number of Memphis Businesses for Sale in the Dataset
The study data comprised 50 listings in the Memphis, TN-MS-AR metro area. As such, some of the businesses used to derive the median valuation might be outside of Memphis, but they are close by and so are probably representative of Memphis business valuations.
In Q1 2008, just one year ago, there were 53 Memphis listings in the BizBuySell.com dataset. As a result of the recession, fewer Memphis business owners are selling because they hope to weather the storm and sell after the economy turns around.
Q1 2009 Revenue Multiples In Memphis, TN
In the Memphis, TN-MS-AR metro area, businesses will typically sell for 0.89 times the selling company's revenues. That was the mean revenue multiple for Q1 2009 in this area of the country.
In other words, a business that has revenues of $200,000 might list for $177,229. Keep in mind that this is simply an average for revenue multiples in Memphis and surrounding communities. Some firms 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 $436,204 in Q1 2009.
To give this some context, the Q1 2008 revenue multiple was 0.99 and the median revenue for listed businesses was $406,483.
Q1 2009 Cash Flow Multiples In Memphis, TN
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Memphis, TN-MS-AR metro area was 3.31.
So, a firm with cash flows of $150,000 might have an asking price of $496,137. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.
If you are interested in what cash flows are for a business in Memphis, BizBuySell.com found that the median cash flow for Memphis area businesses was $113,270 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.76 and the median cash flow was $82,000.
Things to Consider When Selling a Business in Memphis, TN
Before you sell a business, you will need to recast your financials to adjust for what the business owner takes out of the business. This includes things like a high salary, car expenses and other owner perks. This useful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Memphis, TN 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 more information.
Historical Data for Memphis, TN Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses for sale in the Memphis, TN-MS-AR metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Memphis area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Memphis area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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