Q1 2009 Costs to Buy a Business

How Much Is My Arlington Business Worth?

We just received the latest Arlington, Virginia small business valuation trend data for First Quarter 2009.

Q1 2009 Business Valuations in Arlington, VA

According to statistics issued by BizBuySell.com, Arlington business-for-sale listings in Q1 2009 had a median asking price of $250,000.

That compares to a median ask price of $250,000 in Q1 2008. In spite of the difficult economy, Arlington, VA business valuations appear to be relatively stable.

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 Arlington company for much less. However, some Arlington businesses may be selling for much more.

Another thing to remember is that this is the asking price for a Arlington business. When a company 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. As an example, a company listed for $125,000 would often sell for between $106,250 and $112,500.

Number of Arlington Businesses for Sale in the Dataset

The study data comprised 803 listings in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area. As such, some of the businesses used to derive the median valuation might be outside of Arlington, but they are in the area and so are probably representative of Arlington business valuations.

In Q1 2008, just one year ago, there were 997 Arlington listings in the BizBuySell.com dataset. As a result of the recession, fewer Arlington business owners are selling because they hope to weather the storm and sell after the economy turns around.

Q1 2009 Revenue Multiples In Arlington, VA

In the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area, businesses will usually sell for 0.75 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 $151,000. Keep in mind that this is just 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 0.72 and the median revenue for listed businesses was $444,602.

Q1 2009 Cash Flow Multiples In Arlington, VA

Cash flow multiples are another popular technique to value a business.

For Q1 2009, the average cash flow multiple for listed businesses in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area was 3.04.

So, a business with cash flows of $150,000 might have an asking price of $456,113. 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 Arlington, BizBuySell.com reports that the median cash flow for Arlington area businesses was $100,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.13 and the median cash flow was $100,000.

Things to Consider When Selling a Business in Arlington, VA

Before you sell a business, you will need to recast your financials to adjust for what the business owner takes out of the business. This includes things like a high salary, car expenses and other owner perks. This useful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.

Business Valuations for Arlington, VA 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 Arlington, VA Business Valuations

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area for the last 9 quarters.

Quarter
Median Ask
Q1 2007
$250,000
Q2 2007
$250,000
Q3 2007
$250,000
Q4 2007
$250,000
Q1 2008
$250,000
Q2 2008
$250,000
Q3 2008
$250,000
Q4 2008
$250,000
Q1 2009
$250,000

Here is how median revenue multiples are changing in the Arlington area, based on BizBuySell.com's data.

Quarter
Revenue Multiple
Q1 2007
0.75
Q2 2007
0.77
Q3 2007
0.75
Q4 2007
0.76
Q1 2008
0.72
Q2 2008
0.70
Q3 2008
0.71
Q4 2008
0.75
Q1 2009
0.75

The table below shows how cash flow multiples are trending in the Arlington area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.19
Q2 2007
3.15
Q3 2007
3.14
Q4 2007
3.12
Q1 2008
3.13
Q2 2008
3.02
Q3 2008
2.98
Q4 2008
3.08
Q1 2009
3.04

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