Q1 2009 Costs to Buy a Business
How Much Is My Charlotte Business Worth?
We just received the latest Charlotte, North Carolina statistics on business valuations for First Quarter 2009.
Charlotte, NC Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, Charlotte business-for-sale listings in Q1 2009 had a median asking price of $275,000.
That compares to a median ask price of $325,000 in Q1 2008. Given that Charlotte, NC median business asking prices appear to be dropping, it suggests that larger Charlotte businesses in may be holding off on selling until the economy turns around.
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 Charlotte company for much less. However, some Charlotte businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Charlotte business. When a small 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. In practice, this means a business listed for $250,000 would go for between $212,500 and $225,000.
Number of Charlotte Businesses for Sale in the Dataset
The study data comprised 247 listings in the Charlotte-Gastonia-Concord, NC-SC metro area. As such, some of the businesses used to derive the median valuation might be outside of Charlotte, but they are in the area and so are probably representative of Charlotte business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Charlotte spanned 202 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Charlotte business-for-sale listings.
Q1 2009 Revenue Multiples In Charlotte, NC
In the Charlotte-Gastonia-Concord, NC-SC metro area, companies will typically sell for 0.78 times the selling company's revenues. This was 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 $156,697. Remember, however, that this is just 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 $484,278 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.79 and the median revenue for listed businesses was $526,228.
Q1 2009 Cash Flow Multiples In Charlotte, NC
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Charlotte-Gastonia-Concord, NC-SC metro area was 3.53.
So, a firm with cash flows of $150,000 might have an asking price of $528,976. 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 Charlotte, BizBuySell.com found that the median cash flow for Charlotte area businesses was $100,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.41 and the median cash flow was $108,604.
Tips for Charlotte, NC Business Sellers
Don't assume that the price you initially negotiate with a buyer will stay the same all the way to closing. During due diligence, the buyer may find some blemishes on the businesses that lead them to lower their offer. This is a natural part of the process and should be expected. This helpful business selling tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Charlotte, NC 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 Charlotte, NC 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 Charlotte-Gastonia-Concord, NC-SC metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Charlotte area, based on BizBuySell.com's economic data.
The table below shows how cash flow multiples are trending in the Charlotte area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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