Q1 2009 Costs to Buy a Business
How Much Is My Raleigh Business Worth?
BizBuySell.com has just released its Raleigh, North Carolina business valuation data for First Quarter 2009.
Raleigh, NC Q1 2009 Business Valuations
Based on data compiled by BizBuySell.com, Raleigh business-for-sale listings in Q1 2009 had a median asking price of $242,500.
That compares to a median ask price of $250,000 in Q1 2008. Given that Raleigh, NC median business asking prices appear to be dropping, it suggests that larger Raleigh 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 Raleigh company for much less. Similarly, some Raleigh businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Raleigh 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 depends on deal specifics. Based on this metric, a business initially priced at $225,000 might sell for between $191,250 and $202,500.
Number of Raleigh Businesses for Sale in the Dataset
The study data comprised 180 listings in the Raleigh-Cary, NC metro area. Many of the businesses in the dataset are outside of Raleigh, but they are in the area and so are probably representative of Raleigh business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Raleigh spanned 123 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Raleigh business-for-sale listings.
Q1 2009 Revenue Multiples In Raleigh, NC
In the Raleigh-Cary, NC metro area, businesses will typically sell for 0.80 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 $159,853. Remember, however, that this is just 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 $400,000 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.77 and the median revenue for listed businesses was $380,000.
Q1 2009 Cash Flow Multiples In Raleigh, NC
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Raleigh-Cary, NC metro area was 3.33.
So, a firm with cash flows of $150,000 might have an asking price of $498,813. That calculation is dependent on the business selling for the area's average multiple. In practice, cash flow multiples can vary considerably from one business to another.
If you are interested in what cash flows are for a business in Raleigh, BizBuySell.com reports that the median cash flow for Raleigh area businesses was $89,506 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.37 and the median cash flow was $76,400.
Things to Consider When Selling a Business in Raleigh, NC
In this difficult econonmic environment, sellers must be bankers. That means you should offer seller financing to prospective buyers because you, as a seller, may be their only viable source of financing. This tip for selling a business was provided by Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Raleigh, NC Businesses
If you are contemplating buying a business or selling a business and would like to value a specific business, 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 Raleigh, NC Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Raleigh-Cary, NC metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Raleigh area, based on BizBuySell.com's economic data.
The table below shows how cash flow multiples are trending in the Raleigh area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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