Q1 2009 Costs to Buy a Business
How Much Is My St. Paul Business Worth?
BizBuySell.com has just released its St. Paul, Minnesota small business valuation trend data for First Quarter 2009.
Q1 2009 Business Valuations in St. Paul, MN
Based on data compiled by BizBuySell.com, St. Paul business-for-sale listings in Q1 2009 had a median asking price of $275,000.
That compares to a median ask price of $265,000 in Q1 2008. Since the median ask price for businesses for sale in St. Paul has gone up year over year, we can conclude that many smaller businesses in St. Paul are putting off 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 St. Paul company for much less. Alternatively, some St. Paul businesses may be selling for much more.
Also, this is the asking price for a St. Paul business. When an owner lists a company 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. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of St. Paul Businesses for Sale in the Dataset
The study data comprised 351 listings in the Minneapolis-St. Paul-Bloomington, MN-WI metro area. As such, some of the businesses used to derive the median valuation might be outside of St. Paul, but they are in the area and so are probably representative of St. Paul business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for St. Paul spanned 333 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more St. Paul business-for-sale listings.
Q1 2009 Revenue Multiples In St. Paul, MN
In the Minneapolis-St. Paul-Bloomington, MN-WI metro area, businesses will typically sell for 0.94 times the selling company's revenues. That 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 $187,367. Remember, however, that this is in fact an average for revenue multiples in the area. 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 $425,000 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.85 and the median revenue for listed businesses was $397,687.
Q1 2009 Cash Flow Multiples In St. Paul, MN
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Minneapolis-St. Paul-Bloomington, MN-WI metro area was 4.28.
So, a business with cash flows of $150,000 might have an asking price of $641,868. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.
If you are interested in what cash flows are for a business in St. Paul, BizBuySell.com reports that the median cash flow for St. Paul area businesses was $86,382 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.99 and the median cash flow was $85,000.
Things to Consider When Selling a Business in St. Paul, MN
When setting a price for a business, it's worthwhile to invest in a professional valuation. If you define the business selling price without a professional valuation, you may end up leaving money on the table or having an unrealistic price that prevents a deal from ever getting done. This helpful tip on buying a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for St. Paul, MN 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 St. Paul, MN Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses for sale in the Minneapolis-St. Paul-Bloomington, MN-WI metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the St. Paul area, based on BizBuySell.com's quarterly reports.
Here is how cash flow multiples are trending in the St. Paul area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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