Q1 2009 Costs to Buy a Business
How Much Is My Philadelphia Business Worth?
We just received the latest Philadelphia, Pennsylvania business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Philadelphia, PA
According to statistics issued by BizBuySell.com, Philadelphia business-for-sale listings in Q1 2009 had a median asking price of $290,000.
That compares to a median ask price of $250,000 in Q1 2008. Since the median ask price for businesses for sale in Philadelphia has gone up year over year, we can conclude that many smaller businesses in Philadelphia are putting off selling.
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 Philadelphia company for much less. However, some Philadelphia businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Philadelphia 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. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Philadelphia Businesses for Sale in the Dataset
The study data comprised 931 listings in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area. As such, some of the businesses used to derive the median valuation might be outside of Philadelphia, but they are in the area and so are likely representative of Philadelphia business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Philadelphia spanned 963 listings. The downward trend in the number of Philadelphia business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Philadelphia, PA
In the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area, small 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 $174,719. Remember, however, that this is strictly an average for revenue multiples in the area. Some entities 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 $438,520 in Q1 2009.
As a reference point, the Q1 2008 revenue multiple was 0.87 and the median revenue for listed businesses was $375,000.
Q1 2009 Cash Flow Multiples In Philadelphia, PA
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area was 3.32.
So, a firm with cash flows of $150,000 might have an asking price of $498,133. That's only if the firm complies with the local average. The actual distribution on revenue multiples for a given set of businesses can be quite wide-ranging.
In case you were wondering what typical cash flows are for a business in Philadelphia, BizBuySell.com reports that the median cash flow for Philadelphia area businesses was $110,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.22 and the median cash flow was $100,000.
Things to Consider When Selling a Business in Philadelphia, PA
When setting a price for a business, it's worthwhile to invest in a professional valuation. If you define the business selling price without a professional valuation, you may end up leaving money on the table or having an unrealistic price that prevents a deal from ever getting done. This helpful tip on buying a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Philadelphia, PA 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 additional information.
Historical Data for Philadelphia, PA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area for the last 9 quarters.
Here is how median revenue multiples are tracking in the Philadelphia area, based on BizBuySell.com's quarterly reports.
Here is how cash flow multiples are trending in the Philadelphia area, based on BizBuySell.com's quarterly reports.
Flow Multiple
Share this article
Additional Resources for Entrepreneurs