Q1 2009 Costs to Buy a Business
How Much Is My Santa Ana Business Worth?
We just received the latest Santa Ana, California business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Santa Ana, CA
According to statistics issued by BizBuySell.com, Santa Ana business-for-sale listings in Q1 2009 had a median asking price of $230,000.
That compares to a median ask price of $225,000 in Q1 2008. Because the median ask price for businesses for sale in Santa Ana has risen year over year, we can conclude that many smaller firms in Santa Ana 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 Santa Ana company for much less. Alternatively, some Santa Ana businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Santa Ana 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. As an example, a company listed for $125,000 would often sell for between $106,250 and $112,500.
Number of Santa Ana Businesses for Sale in the Dataset
The study data comprised 3978 listings in the Los Angeles-Long Beach-Santa Ana, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Santa Ana, but they are close by and so are probably representative of Santa Ana business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Santa Ana spanned 4059 listings. The downward trend in the number of Santa Ana business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Santa Ana, CA
In the Los Angeles-Long Beach-Santa Ana, CA metro area, businesses will usually sell for 0.79 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 $158,588. Keep in mind 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 $365,000 in Q1 2009.
In terms of trending year over year, the Q1 2008 revenue multiple was 0.83 and the median revenue for listed businesses was $360,000.
Q1 2009 Cash Flow Multiples In Santa Ana, CA
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area was 2.97.
So, a business with cash flows of $150,000 might have an asking price of $446,200. 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 Santa Ana, BizBuySell.com reports that the median cash flow for Santa Ana area businesses was $94,367 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.01 and the median cash flow was $92,000.
Things to Consider When Selling a Business in Santa Ana, 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 Santa Ana, 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 published every quarter. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for more information.
Historical Data for Santa Ana, 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 Los Angeles-Long Beach-Santa Ana, CA metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Santa Ana area, based on BizBuySell.com's economic data.
Here is how cash flow multiples are trending in the Santa Ana area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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