Q1 2009 Costs to Buy a Business
How Much Is My Pittsburgh Business Worth?
BizBuySell.com has just released its Pittsburgh, Pennsylvania small business valuation trend data for First Quarter 2009.
Q1 2009 Business Valuations in Pittsburgh, PA
According to statistics issued by BizBuySell.com, Pittsburgh business-for-sale listings in Q1 2009 had a median asking price of $275,000.
That compares to a median ask price of $283,034 in Q1 2008. One interpretation of the lower median asking price is that Pittsburgh, PA sellers are dropping their asking prices in light of market conditions.
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 Pittsburgh company for much less. Similarly, some Pittsburgh businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Pittsburgh business. When a company owner lists a business for sale, they typically set a price that ends up being more than the contracted 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 Pittsburgh Businesses for Sale in the Dataset
The study data comprised 81 listings in the Pittsburgh, PA metro area. Many of the businesses in the dataset are outside of Pittsburgh, but they are in the area and so are likely representative of Pittsburgh business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Pittsburgh spanned 124 listings. In a market where you would think fewer business owners would be selling it's a bit surprising to see more Pittsburgh business-for-sale listings.
Q1 2009 Revenue Multiples In Pittsburgh, PA
In the Pittsburgh, PA metro area, businesses will usually sell for 0.97 times the selling company's revenues. That was the mean revenue multiple for Q1 2009 in this part of the country.
In other words, a firm with revenues of $200,000 might list for $194,964. Keep in mind that this is only 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 $380,000 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.96 and the median revenue for listed businesses was $395,387.
Q1 2009 Cash Flow Multiples In Pittsburgh, PA
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Pittsburgh, PA metro area was 3.88.
So, a business with cash flows of $150,000 might have an asking price of $582,426. 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 Pittsburgh, BizBuySell.com reports that the median cash flow for Pittsburgh area businesses was $77,300 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.97 and the median cash flow was $82,000.
Things to Consider When Selling a Business in Pittsburgh, PA
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 Pittsburgh, PA 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 Pittsburgh, PA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Pittsburgh, PA metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Pittsburgh area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Pittsburgh area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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