Q1 2009 Costs to Buy a Business
How Much Is My New Orleans Business Worth?
We just received the latest New Orleans, Louisiana business valuation data for First Quarter 2009.
New Orleans, LA Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, New Orleans business-for-sale listings in Q1 2009 had a median asking price of $225,000.
That compares to a median ask price of $225,000 in Q1 2008. In spite of the difficult economy, New Orleans, LA business valuations appear to be relatively stable.
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 New Orleans company for much less. However, some New Orleans businesses may be selling for much more.
Another thing to remember is that this is the asking price for a New Orleans business. When an entrepreneur lists a business for sale, they typically set a price that ends up being more than the ultimate sale price. A sale-to-ask ratio typically might be between 0.85 and 0.90, but of course it varies considerably. In practice, this means a business listed for $250,000 would go for between $212,500 and $225,000.
Number of New Orleans Businesses for Sale in the Dataset
The study data comprised 88 listings in the New Orleans-Metairie-Kenner, LA metro area. As such, some of the businesses used to derive the median valuation might be outside of New Orleans, but they are in the area and so are probably representative of New Orleans business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for New Orleans spanned 69 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more New Orleans business-for-sale listings.
New Orleans, LA Q1 2009 Revenue Multiples
In the New Orleans-Metairie-Kenner, LA metro area, small businesses will usually sell for 1.04 times the selling company's revenues. The data indicates that is 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 $207,400. Remember, however, that this is only an average for revenue multiples in the area. 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 $318,784 in Q1 2009.
As a reference point, the Q1 2008 revenue multiple was 0.87 and the median revenue for listed businesses was $325,292.
Q1 2009 Cash Flow Multiples In New Orleans, LA
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for businesses listed in the New Orleans-Metairie-Kenner, LA metro area was 3.69.
So, a company with cash flows of $150,000 might have an asking price of $553,589. That's only if the firm complies with the local average. In practice, cash flow multiples can vary considerably from one business to another.
In case you were wondering what typical cash flows are for a business in New Orleans, BizBuySell.com found that the median cash flow for New Orleans area businesses was $79,950 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.66 and the median cash flow was $65,000.
Tips for New Orleans, LA Business Sellers
Most business sales involve seller financing, especially in this enviroment when credit is tight. You have to finance as much as 70% of the purchase price. Typically, you would structure the deal to be paid off in full within four to five years. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for New Orleans, LA Businesses
If you are contemplating buying a business or selling a business and would like to look at comparables in the area, 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 a nationally-recognized economic report that tracks trends in the business-for-sale marketplace. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for more information.
Historical Data for New Orleans, LA 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 New Orleans-Metairie-Kenner, LA metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the New Orleans area, based on BizBuySell.com's data.
The table below shows how cash flow multiples are trending in the New Orleans area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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