Q1 2009 Costs to Buy a Business
How Much Is My Boston Business Worth?
BizBuySell.com has just released its Boston, Massachusetts business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Boston, MA
According to statistics issued by BizBuySell.com, Boston business-for-sale listings in Q1 2009 had a median asking price of $199,000.
That compares to a median ask price of $212,500 in Q1 2008. Given that Boston, MA median business asking prices appear to be dropping, it suggests that larger Boston businesses in may be holding off on selling until the economy turns around.
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 Boston company for much less. However, some Boston businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Boston 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. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Boston Businesses for Sale in the Dataset
The study data comprised 553 listings in the Boston-Cambridge-Quincy, MA-NH metro area. As such, some of the businesses used to derive the median valuation might be outside of Boston, but they are in the area and so are probably representative of Boston business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Boston spanned 698 listings. The downward trend in the number of Boston business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Boston, MA
In the Boston-Cambridge-Quincy, MA-NH metro area, businesses will usually 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 firm with revenues of $200,000 might list for $158,966. Remember, however, that this is simply an average for revenue multiples in Boston 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 $364,077 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.84 and the median revenue for listed businesses was $350,000.
Q1 2009 Cash Flow Multiples In Boston, MA
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Boston-Cambridge-Quincy, MA-NH metro area was 2.99.
So, a business with cash flows of $150,000 might have an asking price of $448,519. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.
In case you were wondering what typical cash flows are for a business in Boston, BizBuySell.com reports that the median cash flow for Boston area businesses was $96,815 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 2.97 and the median cash flow was $100,000.
Things to Consider When Selling a Business in Boston, MA
The best time to sell a business is when you don't have to sell the business. If you have to sell under time pressure, you are not likely to get the best sale price. So, don't wait to sell a business until something (e.g. bad health, a divorce, etc.) forces you to sell. This advice on selling a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Boston, MA Businesses
If you are contemplating buying a business or selling a business and would like to find out how much a business is worth, 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 Boston, MA 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 Boston-Cambridge-Quincy, MA-NH metro area for the last 9 quarters.
Here is how median revenue multiples are changing in the Boston area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Boston area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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