Q1 2009 Costs to Buy a Business
How Much Is My Sacramento Business Worth?
We just received the latest Sacramento, California business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Sacramento, CA
According to statistics issued by BizBuySell.com, Sacramento business-for-sale listings in Q1 2009 had a median asking price of $228,000.
That compares to a median ask price of $217,500 in Q1 2008. Because the median ask price for businesses for sale in Sacramento has risen year over year, we can conclude that many smaller firms in Sacramento 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 Sacramento company for much less. However, some Sacramento businesses may be selling for much more.
Also, this is the asking price for a Sacramento business. When a company 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 Sacramento Businesses for Sale in the Dataset
The study data comprised 190 listings in the Sacramento--Arden-Arcade--Roseville, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Sacramento, but they are in the area and so are probably representative of Sacramento business valuations.
In Q1 2008, just one year ago, there were 214 Sacramento listings in the BizBuySell.com dataset. As a result of the recession, fewer Sacramento business owners are selling because they hope to weather the storm and sell after the economy turns around.
Sacramento, CA Q1 2009 Revenue Multiples
In the Sacramento--Arden-Arcade--Roseville, CA metro area, businesses will typically sell for 0.73 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 business that has revenues of $200,000 might list for $145,091. Remember, however, that this is just an average for revenue multiples in Sacramento and surrounding communities. 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 $451,156 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.81 and the median revenue for listed businesses was $397,610.
Q1 2009 Cash Flow Multiples In Sacramento, CA
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Sacramento--Arden-Arcade--Roseville, CA metro area was 3.24.
So, a business with cash flows of $150,000 might have an asking price of $486,106. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.
In case you were wondering what typical cash flows are for a business in Sacramento, BizBuySell.com reports that the median cash flow for Sacramento area businesses was $99,361 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.62 and the median cash flow was $90,000.
Tips for Sacramento, CA Business Sellers
Before you sell a business, you will need to recast your financials to adjust for what the business owner takes out of the business. This includes things like a high salary, car expenses and other owner perks. This useful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Sacramento, CA 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 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 Sacramento, CA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Sacramento--Arden-Arcade--Roseville, CA metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Sacramento area, based on BizBuySell.com's data.
The table below shows how cash flow multiples are trending in the Sacramento area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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