Q1 2009 Costs to Buy a Business
How Much Is My Indianapolis Business Worth?
We just received the latest Indianapolis, Indiana business valuation data for First Quarter 2009.
Indianapolis, IN Q1 2009 Business Valuations
Based on data compiled by BizBuySell.com, Indianapolis business-for-sale listings in Q1 2009 had a median asking price of $250,000.
That compares to a median ask price of $257,000 in Q1 2008. Given that Indianapolis, IN median business asking prices appear to be dropping, it suggests that larger Indianapolis 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 Indianapolis company for much less. However, some Indianapolis businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Indianapolis 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. That means a company listed for $200,000 might be sold for between $170,000 and $180,000.
Number of Indianapolis Businesses for Sale in the Dataset
The study data comprised 127 listings in the Indianapolis-Carmel, IN metro area. As such, some of the businesses used to derive the median valuation might be outside of Indianapolis, but they are in the area and so are likely representative of Indianapolis business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Indianapolis spanned 90 listings. The downward trend in the number of Indianapolis business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Indianapolis, IN
In the Indianapolis-Carmel, IN metro area, businesses will typically sell for 0.76 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 business that has revenues of $200,000 might list for $152,283. Remember, however, that this is simply 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 $396,000 in Q1 2009.
To give this some context, the Q1 2008 revenue multiple was 1.03 and the median revenue for listed businesses was $359,584.
Q1 2009 Cash Flow Multiples In Indianapolis, IN
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Indianapolis-Carmel, IN metro area was 3.46.
So, a company with cash flows of $150,000 might have an asking price of $519,672. That calculation is dependent on the business selling for the area's average multiple. Most businesses will not conform to industry- or area averages.
In case you were wondering what typical cash flows are for a business in Indianapolis, BizBuySell.com reports that the median cash flow for Indianapolis area businesses was $86,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.74 and the median cash flow was $91,500.
Things to Consider When Selling a Business in Indianapolis, IN
Before you sell a business, you will need to recast your financials to adjust for what the business owner takes out of the business. This includes things like a high salary, car expenses and other owner perks. This useful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Indianapolis, IN 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 published every quarter. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for more information.
Historical Data for Indianapolis, IN Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Indianapolis-Carmel, IN metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Indianapolis area, based on BizBuySell.com's economic data.
The table below shows how cash flow multiples are trending in the Indianapolis area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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