Q1 2009 Costs to Buy a Business
How Much Is My St. Louis Business Worth?
We just received the latest St. Louis, Missouri business-for-sale statistics.
St. Louis, MO Q1 2009 Business Valuations
Based on data compiled by BizBuySell.com, St. Louis business-for-sale listings in Q1 2009 had a median asking price of $249,000.
That compares to a median ask price of $275,000 in Q1 2008. One interpretation of the lower median asking price is that St. Louis, MO sellers are dropping their asking prices in light of market conditions.
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 St. Louis company for much less. However, some St. Louis businesses may be selling for much more.
Another thing to remember is that this is the asking price for a St. Louis business. When a business owner lists a business for sale, they typically set a price that ends up being more than the contracted sale price. A sale-to-ask ratio typically might be between 0.85 and 0.90, but of course it depends on deal specifics. This suggests that a company listed for $325,000 might be purchased for between $276,250 and $292,500.
Number of St. Louis Businesses for Sale in the Dataset
The study data comprised 193 listings in the St. Louis, MO-IL metro area. As such, some of the businesses used to derive the median valuation might be outside of St. Louis, but they are in the area and so are likely representative of St. Louis business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for St. Louis spanned 155 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more St. Louis business-for-sale listings.
Q1 2009 Revenue Multiples In St. Louis, MO
In the St. Louis, MO-IL metro area, businesses will usually sell for 0.81 times the selling company's revenues. The data indicates that is 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 $162,942. Remember, however, that this is only an average for revenue multiples in St. Louis 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 $433,093 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.83 and the median revenue for listed businesses was $431,354.
Q1 2009 Cash Flow Multiples In St. Louis, MO
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the St. Louis, MO-IL metro area was 4.10.
So, a business with cash flows of $150,000 might have an asking price of $614,711. That calculation is dependent on the business selling for the area's average multiple. Actual cash flow multiples are based on business specifics.
If you are interested in what cash flows are for a business in St. Louis, BizBuySell.com determined that the median cash flow for St. Louis area businesses was $76,188 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.58 and the median cash flow was $100,000.
Things to Consider When Selling a Business in St. Louis, MO
Selling a business can be a highly emotional process. To many business owners, the business is their baby, the result of years of hard work. However, when selling a business, it's imperative to keep emotions in check. Be objective and rational and you'll get across the finish line in the best possible way. This good selling-a-business tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for St. Louis, MO 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 published every quarter. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for additional information.
Historical Data for St. Louis, MO Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the St. Louis, MO-IL metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the St. Louis area, based on BizBuySell.com's economic data.
The table below shows how cash flow multiples are trending in the St. Louis area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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