Q1 2009 Costs to Buy a Business
How Much Is My Birmingham Business Worth?
BizBuySell.com has just released its Birmingham, Alabama business valuation data for First Quarter 2009.
Birmingham, AL Q1 2009 Business Valuations
Based on data compiled by BizBuySell.com, Birmingham business-for-sale listings in Q1 2009 had a median asking price of $277,500.
That compares to a median ask price of $225,000 in Q1 2008. Because the median ask price for businesses for sale in Birmingham has risen year over year, we can conclude that many smaller firms in Birmingham are holding off on 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 Birmingham company for much less. Similarly, some Birmingham businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Birmingham business. When a company 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 depends on deal specifics. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Birmingham Businesses for Sale in the Dataset
The study data comprised 88 listings in the Birmingham-Hoover, AL metro area. As such, some of the businesses used to derive the median valuation might be outside of Birmingham, but they are in the area and so are probably representative of Birmingham business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Birmingham spanned 81 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Birmingham business-for-sale listings.
Q1 2009 Revenue Multiples In Birmingham, AL
In the Birmingham-Hoover, AL metro area, businesses will typically sell for 0.89 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 firm with revenues of $200,000 might list for $178,474. Remember, however, that this is just an average for revenue multiples in the area. Some entities 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 $445,552 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.89 and the median revenue for listed businesses was $430,300.
Q1 2009 Cash Flow Multiples In Birmingham, AL
Cash flow multiples are another useful method to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Birmingham-Hoover, AL metro area was 3.66.
So, a business with cash flows of $150,000 might have an asking price of $549,481. 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 Birmingham, BizBuySell.com reports that the median cash flow for Birmingham area businesses was $98,863 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.62 and the median cash flow was $80,600.
Things to Consider When Selling a Business in Birmingham, AL
Competitors tend to pay less for a business than strategic buyers. In most cases, selling out to a competitor should be your exit strategy of last resort (although selling to an employee may get an even lower exit price). This good advice comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Birmingham, AL Businesses
If you are contemplating buying a business or selling a business and would like to get an estimated business valuation, 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 Birmingham, AL Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Birmingham-Hoover, AL metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Birmingham area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Birmingham area, based on BizBuySell.com's quarterly reports.
Flow Multiple
Share this article
Additional Resources for Entrepreneurs