Q1 2009 Costs to Buy a Business
How Much Is My Honolulu Business Worth?
We just received the latest Honolulu, Hawaii business-for-sale statistics.
Q1 2009 Business Valuations in Honolulu, HI
According to statistics issued by BizBuySell.com, Honolulu business-for-sale listings in Q1 2009 had a median asking price of $335,000.
That compares to a median ask price of $297,000 in Q1 2008. With median asking prices for Honolulu, HI businesses for sale trending up, we can conclude that only businesses that know they can command a premium price are willing to sell in this tough market.
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 Honolulu company for much less. Similarly, some Honolulu businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Honolulu business. When a 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 Honolulu Businesses for Sale in the Dataset
The study data comprised 27 listings in the Honolulu, HI metro area. As such, some of the businesses used to derive the median valuation might be outside of Honolulu, but they are in the area and so are probably representative of Honolulu business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Honolulu spanned 18 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Honolulu business-for-sale listings.
Honolulu, HI Q1 2009 Revenue Multiples
In the Honolulu, HI metro area, businesses will typically sell for 0.87 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 firm with revenues of $200,000 might list for $173,066. Remember, however, that this is in fact an average for revenue multiples in the area. Some small businesses 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 $466,754 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.58 and the median revenue for listed businesses was $717,934.
Q1 2009 Cash Flow Multiples In Honolulu, HI
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Honolulu, HI metro area was 3.09.
So, a business with cash flows of $150,000 might have an asking price of $463,147. That calculation is dependent on the business selling for the area's average multiple. Cash flow multiples will usually vary considerably based on many factors.
If you are interested in what cash flows are for a business in Honolulu, BizBuySell.com reports that the median cash flow for Honolulu area businesses was $145,247 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 2.71 and the median cash flow was $133,174.
Tips for Honolulu, HI 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 Honolulu, HI 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 published every quarter. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for more information.
Historical Data for Honolulu, HI Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Honolulu, HI metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Honolulu area, based on BizBuySell.com's economic data.
The table below shows how cash flow multiples are trending in the Honolulu area, based on BizBuySell.com's quarterly reports.
Flow Multiple
Share this article
Additional Resources for Entrepreneurs