Q1 2009 Costs to Buy a Business
How Much Is My San Jose Business Worth?
Every quarter, BizBuySell.com published business valuation data, and we now have their latest San Jose, California business-for-sale statistics.
San Jose, CA Q1 2009 Business Valuations
Based on data compiled by BizBuySell.com, San Jose business-for-sale listings in Q1 2009 had a median asking price of $260,000.
That compares to a median ask price of $249,000 in Q1 2008. Because the median ask price for businesses for sale in San Jose has risen year over year, we can conclude that many smaller firms in San Jose 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 San Jose company for much less. However, some San Jose businesses may be selling for much more.
Another thing to remember is that this is the asking price for a San Jose business. When a small business owner lists a business for sale, they typically set a price that ends up being more than the ultimate 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 San Jose Businesses for Sale in the Dataset
The study data comprised 142 listings in the San Jose-Sunnyvale-Santa Clara, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of San Jose, but they are in the area and so are probably representative of San Jose business valuations.
In Q1 2008, just one year ago, there were 165 San Jose listings in the BizBuySell.com dataset. As a result of the recession, fewer San Jose business owners are selling because they hope to weather the storm and sell after the economy turns around.
Q1 2009 Revenue Multiples In San Jose, CA
In the San Jose-Sunnyvale-Santa Clara, CA metro area, companies will usually sell for 0.88 times the selling company's revenues. This was 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 $176,010. Remember, however, that this is just an average for revenue multiples in the area. 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 $406,582 in Q1 2009.
As a reference point, the Q1 2008 revenue multiple was 0.74 and the median revenue for listed businesses was $433,777.
Q1 2009 Cash Flow Multiples In San Jose, CA
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for businesses listed in the San Jose-Sunnyvale-Santa Clara, CA metro area was 3.60.
So, a business with cash flows of $150,000 might have an asking price of $539,386. 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 San Jose, BizBuySell.com reports that the median cash flow for San Jose area businesses was $100,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.35 and the median cash flow was $100,000.
Things to Consider When Selling a Business in San Jose, CA
Most business sales involve seller financing, especially in this enviroment when credit is tight. You have to finance as much as 70% of the purchase price. Typically, you would structure the deal to be paid off in full within four to five years. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for San Jose, CA 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 more information.
Historical Data for San Jose, CA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the San Jose-Sunnyvale-Santa Clara, CA metro area for the last 9 quarters.
Here is how median revenue multiples are changing in the San Jose area, based on BizBuySell.com's data.
The table below shows how cash flow multiples are trending in the San Jose area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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