Q1 2009 Costs to Buy a Business
How Much Is My Houston Business Worth?
Every quarter, BizBuySell.com published business valuation data, and we now have their latest Houston, Texas small business valuation trend data for First Quarter 2009.
Q1 2009 Business Valuations in Houston, TX
According to statistics issued by BizBuySell.com, Houston business-for-sale listings in Q1 2009 had a median asking price of $295,000.
That compares to a median ask price of $221,500 in Q1 2008. Because the median ask price for businesses for sale in Houston has risen year over year, we can conclude that many smaller firms in Houston are holding off on selling.
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 Houston company for much less. Similarly, some Houston businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Houston business. When a company 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 depends on deal specifics. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Houston Businesses for Sale in the Dataset
The study data comprised 505 listings in the Houston-Sugar Land-Baytown, TX metro area. As such, some of the businesses used to derive the median valuation might be outside of Houston, but they are nearby and so are probably representative of Houston business valuations.
In Q1 2008, just one year ago, there were 572 Houston listings in the BizBuySell.com dataset. As a result of the recession, fewer Houston business owners are selling because they hope to weather the storm and sell after the economy turns around.
Q1 2009 Revenue Multiples In Houston, TX
In the Houston-Sugar Land-Baytown, TX metro area, businesses will typically sell for 1.07 times the selling company's revenues. That was the mean revenue multiple for Q1 2009 in this metro area.
In other words, a business that has revenues of $200,000 might list for $214,968. Remember, however, that this is only an average for revenue multiples in Houston 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 $410,000 in Q1 2009.
As a reference point, the Q1 2008 revenue multiple was 1.07 and the median revenue for listed businesses was $346,667.
Q1 2009 Cash Flow Multiples In Houston, TX
Cash flow multiples are another popular technique to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Houston-Sugar Land-Baytown, TX metro area was 3.65.
So, a business with cash flows of $150,000 might have an asking price of $548,081. 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 Houston, BizBuySell.com reports that the median cash flow for Houston area businesses was $105,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.56 and the median cash flow was $93,942.
Tips for Houston, TX Business Sellers
Buyers want a business that is easy to understand and easy to run. Prior to selling a business, be sure to prepare a thorough operations manual that explains in detail how a new buyer would run the business. This helpful advice on how to buy a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Houston, TX 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 Houston, TX Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Houston-Sugar Land-Baytown, TX metro area for the last 9 quarters.
Here is how median revenue multiples are tracking in the Houston area, based on BizBuySell.com's data.
The table below shows how cash flow multiples are trending in the Houston area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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