Q1 2009 Costs to Buy a Business
How Much Is My Norfolk Business Worth?
We just received the latest Norfolk, Virginia business valuation data for First Quarter 2009.
Norfolk, VA Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, Norfolk business-for-sale listings in Q1 2009 had a median asking price of $280,000.
That compares to a median ask price of $225,000 in Q1 2008. Because the median ask price for businesses for sale in Norfolk has risen year over year, we can conclude that many smaller firms in Norfolk 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 Norfolk company for much less. Similarly, some Norfolk businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Norfolk business. When an 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 Norfolk Businesses for Sale in the Dataset
The study data comprised 209 listings in the Virginia Beach-Norfolk-Newport News, VA-NC metro area. As such, some of the businesses used to derive the median valuation might be outside of Norfolk, but they are close by and so are probably representative of Norfolk business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Norfolk spanned 216 listings. The downward trend in the number of Norfolk business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Norfolk, VA
In the Virginia Beach-Norfolk-Newport News, VA-NC metro area, businesses will usually sell for 0.77 times the selling company's revenues. The data indicates that is 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 $153,296. Keep in mind 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 $425,000 in Q1 2009.
In terms of trending year over year, the Q1 2008 revenue multiple was 0.74 and the median revenue for listed businesses was $400,000.
Q1 2009 Cash Flow Multiples In Norfolk, VA
Cash flow multiples are another popular technique to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Virginia Beach-Norfolk-Newport News, VA-NC metro area was 3.33.
So, a business with cash flows of $150,000 might have an asking price of $500,065. 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 Norfolk, BizBuySell.com reports that the median cash flow for Norfolk area businesses was $96,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.23 and the median cash flow was $90,000.
Tips for Norfolk, VA Business Sellers
Most business sales involve seller financing, especially in this enviroment when credit is tight. You have to finance as much as 70% of the purchase price. Typically, you would structure the deal to be paid off in full within four to five years. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Norfolk, VA 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 Norfolk, VA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Virginia Beach-Norfolk-Newport News, VA-NC metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Norfolk area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Norfolk area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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