Q1 2009 Costs to Buy a Business
How Much Is My Rochester Business Worth?
We just received the latest Rochester, New York statistics on business valuations for First Quarter 2009.
Q1 2009 Business Valuations in Rochester, NY
Based on data compiled by BizBuySell.com, Rochester business-for-sale listings in Q1 2009 had a median asking price of $277,500.
That compares to a median ask price of $235,000 in Q1 2008. Because the median ask price for businesses for sale in Rochester has risen year over year, we can conclude that many smaller firms in Rochester are holding off on 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 Rochester company for much less. Similarly, some Rochester businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Rochester business. When an entrepreneur 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. That means a company listed for $200,000 might be sold for between $170,000 and $180,000.
Number of Rochester Businesses for Sale in the Dataset
The study data comprised 50 listings in the Rochester, NY metro area. As such, some of the businesses used to derive the median valuation might be outside of Rochester, but they are in the area and so are probably representative of Rochester business valuations.
In Q1 2008, just one year ago, there were 98 Rochester listings in the BizBuySell.com dataset. As a result of the recession, fewer Rochester business owners are selling because they hope to weather the storm and sell after the economy turns around.
Rochester, NY Q1 2009 Revenue Multiples
In the Rochester, NY metro area, businesses will usually sell for 1.18 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 business that has revenues of $200,000 might list for $235,243. Remember, however, that this is just an average for revenue multiples in Rochester and surrounding communities. 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 $450,602 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 1.00 and the median revenue for listed businesses was $390,000.
Q1 2009 Cash Flow Multiples In Rochester, NY
Cash flow multiples are another popular technique to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Rochester, NY metro area was 4.43.
So, a business with cash flows of $150,000 might have an asking price of $663,911. That's only if the firm complies with the local average. Cash flow multiples will usually vary considerably based on many factors.
If you are interested in what cash flows are for a business in Rochester, BizBuySell.com reports that the median cash flow for Rochester area businesses was $86,088 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 4.45 and the median cash flow was $70,822.
Things to Consider When Selling a Business in Rochester, NY
Competitors tend to pay less for a business than strategic buyers. In most cases, selling out to a competitor should be your exit strategy of last resort (although selling to an employee may get an even lower exit price). This good advice comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Rochester, NY 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 additional information.
Historical Data for Rochester, NY Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Rochester, NY metro area for the last 9 quarters.
Here is how median revenue multiples are moving in the Rochester area, based on BizBuySell.com's economic data.
The table below shows how cash flow multiples are trending in the Rochester area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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