Q1 2009 Costs to Buy a Business
How Much Is My Tucson Business Worth?
We just received the latest Tucson, Arizona business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Tucson, AZ
Based on data compiled by BizBuySell.com, Tucson business-for-sale listings in Q1 2009 had a median asking price of $250,000.
That compares to a median ask price of $239,000 in Q1 2008. With median asking prices for Tucson, AZ businesses for sale trending up, we can conclude that only businesses that know they can command a premium price are willing to sell in this tough market.
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 Tucson company for much less. However, some Tucson businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Tucson business. When an entrepreneur 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 varies considerably. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Tucson Businesses for Sale in the Dataset
The study data comprised 209 listings in the Tucson, AZ metro area. Many of the businesses in the dataset are outside of Tucson, but they are nearby and so are probably representative of Tucson business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Tucson spanned 175 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Tucson business-for-sale listings.
Tucson, AZ Q1 2009 Revenue Multiples
In the Tucson, AZ metro area, businesses will typically sell for 0.96 times the selling company's revenues. The data indicates that is 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 $191,000. Remember, however, that this is just an average for revenue multiples in Tucson and surrounding communities. Some 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 $344,387 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.88 and the median revenue for listed businesses was $371,461.
Q1 2009 Cash Flow Multiples In Tucson, AZ
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Tucson, AZ metro area was 3.52.
So, a business with cash flows of $150,000 might have an asking price of $528,442. 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 Tucson, BizBuySell.com reports that the median cash flow for Tucson area businesses was $94,323 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.48 and the median cash flow was $85,370.
Things to Consider When Selling a Business in Tucson, AZ
The best time to sell a business is when you don't have to sell the business. If you have to sell under time pressure, you are not likely to get the best sale price. So, don't wait to sell a business until something (e.g. bad health, a divorce, etc.) forces you to sell. This advice on selling a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Tucson, AZ 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 Tucson, AZ Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Tucson, AZ metro area for the last 9 quarters.
Here is how median revenue multiples are changing in the Tucson area, based on BizBuySell.com's data.
Here is how cash flow multiples are trending in the Tucson area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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