Q1 2009 Costs to Buy a Business
How Much Is My Warren Business Worth?
BizBuySell.com has just released its Warren, Michigan small business valuation trend data for First Quarter 2009.
Q1 2009 Business Valuations in Warren, MI
According to statistics issued by BizBuySell.com, Warren business-for-sale listings in Q1 2009 had a median asking price of $243,500.
That compares to a median ask price of $199,900 in Q1 2008. Since the median ask price for businesses for sale in Warren has gone up year over year, we can conclude that many smaller businesses in Warren 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 Warren company for much less. However, some Warren businesses may be selling for much more.
Also, this is the asking price for a Warren business. When a business owner lists a business for sale, they typically set a price that ends up being more than the final 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 Warren Businesses for Sale in the Dataset
The study data comprised 158 listings in the Detroit-Warren-Livonia, MI metro area. As such, some of the businesses used to derive the median valuation might be outside of Warren, but they are nearby and so are likely representative of Warren business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Warren spanned 189 listings. The downward trend in the number of Warren business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Warren, MI
In the Detroit-Warren-Livonia, MI metro area, small businesses will typically sell for 0.87 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 $174,560. Remember, however, that this is strictly 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 $376,902 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.91 and the median revenue for listed businesses was $318,820.
Q1 2009 Cash Flow Multiples In Warren, MI
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Detroit-Warren-Livonia, MI metro area was 3.55.
So, a firm with cash flows of $150,000 might have an asking price of $532,065. That's only if the firm complies with the local average. In practice, cash flow multiples can vary considerably from one business to another.
If you are interested in what cash flows are for a business in Warren, BizBuySell.com reports that the median cash flow for Warren area businesses was $86,330 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.39 and the median cash flow was $80,835.
Things to Consider When Selling a Business in Warren, MI
Selling a business can be a full-time job in and of itself. If you sell on your own, without assistance from a business broker, you may be distracted from running the business, which can result in a deterioriation in business results and a lower sale price. This helpful advice was provided by Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Warren, MI 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 Warren, MI Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Detroit-Warren-Livonia, MI metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Warren area, based on BizBuySell.com's quarterly reports.
Here is how cash flow multiples are trending in the Warren area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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