Q1 2009 Costs to Buy a Business
How Much Is My Cleveland Business Worth?
We just received the latest Cleveland, Ohio statistics on business valuations for First Quarter 2009.
Q1 2009 Business Valuations in Cleveland, OH
Based on data compiled by BizBuySell.com, Cleveland business-for-sale listings in Q1 2009 had a median asking price of $177,500.
That compares to a median ask price of $199,000 in Q1 2008. One interpretation of the lower median asking price is that Cleveland, OH sellers are dropping their asking prices in light of market conditions.
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 Cleveland company for much less. However, some Cleveland businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Cleveland business. When a business owner 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 depends on deal specifics. In practice, this means a business listed for $250,000 would go for between $212,500 and $225,000.
Number of Cleveland Businesses for Sale in the Dataset
The study data comprised 96 listings in the Cleveland-Elyria-Mentor, OH metro area. As such, some of the businesses used to derive the median valuation might be outside of Cleveland, but they are nearby and so are likely representative of Cleveland business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Cleveland spanned 163 listings. In a market where you would think fewer business owners would be selling it's a bit surprising to see more Cleveland business-for-sale listings.
Q1 2009 Revenue Multiples In Cleveland, OH
In the Cleveland-Elyria-Mentor, OH metro area, companies will usually sell for 0.75 times the selling company's revenues. That was the mean revenue multiple for Q1 2009 in this metro area.
In other words, a firm with revenues of $200,000 might list for $150,020. Remember, however, that this is just an average for revenue multiples in the area. Some companies 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 $306,714 in Q1 2009.
To give this some context, the Q1 2008 revenue multiple was 0.69 and the median revenue for listed businesses was $380,894.
Q1 2009 Cash Flow Multiples In Cleveland, OH
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for businesses listed in the Cleveland-Elyria-Mentor, OH metro area was 3.45.
So, a business with cash flows of $150,000 might have an asking price of $518,246. That calculation is dependent on the business selling for the area's average multiple. Most businesses will not conform to industry- or area averages.
If you are interested in what cash flows are for a business in Cleveland, BizBuySell.com reports that the median cash flow for Cleveland area businesses was $64,918 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.32 and the median cash flow was $70,452.
Things to Consider When Selling a Business in Cleveland, OH
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 Cleveland, OH 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 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 Cleveland, OH Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Cleveland-Elyria-Mentor, OH metro area for the last 9 quarters.
Here is how median revenue multiples are changing in the Cleveland area, based on BizBuySell.com's data.
The table below shows how cash flow multiples are trending in the Cleveland area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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