Q1 2009 Costs to Buy a Business

How Much Is My Hoover Business Worth?

Every quarter, BizBuySell.com published business valuation data, and we now have their latest Hoover, Alabama small business valuation trend data for First Quarter 2009.

Q1 2009 Business Valuations in Hoover, AL

According to statistics issued by BizBuySell.com, Hoover 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 Hoover has risen year over year, we can conclude that many smaller firms in Hoover 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 Hoover company for much less. However, some Hoover businesses may be selling for much more.

Another thing to remember is that this is the asking price for a Hoover business. When a business owner lists a business for sale, they typically set a price that ends up being more than the contracted 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 Hoover Businesses for Sale in the Dataset

The study data comprised 88 listings in the Birmingham-Hoover, AL metro area. Many of the businesses in the dataset are outside of Hoover, but they are in the area and so are probably representative of Hoover business valuations.

One year ago, in Q1 2008, the BizBuySell.com dataset for Hoover spanned 81 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Hoover business-for-sale listings.

Hoover, AL Q1 2009 Revenue Multiples

In the Birmingham-Hoover, AL metro area, businesses will usually sell for 0.89 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 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 companies 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 give this some context, the Q1 2008 revenue multiple was 0.89 and the median revenue for listed businesses was $430,300.

Q1 2009 Cash Flow Multiples In Hoover, AL

Cash flow multiples are another common way 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 company with cash flows of $150,000 might have an asking price of $549,481. That calculation is dependent on the business selling for the area's average multiple. Most businesses will not conform to industry- or area averages.

In case you were wondering what typical cash flows are for a business in Hoover, BizBuySell.com reports that the median cash flow for Hoover 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.

Tips for Hoover, AL Business Sellers

Buyers pay more for certainty than for uncertainty, especially when it comes to future cash flows. So, think about ways to lock in future cash flows for a prospective buyer and, if it can be done, you'll then be able to command a higher sale price for your business. This useful tip for selling a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.

Business Valuations for Hoover, AL 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 Hoover, AL 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 Birmingham-Hoover, AL metro area for the last 9 quarters.

Quarter
Median Ask
Q1 2007
$296,000
Q2 2007
$200,000
Q3 2007
$217,500
Q4 2007
$245,000
Q1 2008
$225,000
Q2 2008
$232,500
Q3 2008
$262,500
Q4 2008
$332,000
Q1 2009
$277,500

Here is how median revenue multiples are trending in the Hoover area, based on BizBuySell.com's quarterly reports.

Quarter
Revenue Multiple
Q1 2007
0.68
Q2 2007
0.76
Q3 2007
0.76
Q4 2007
0.95
Q1 2008
0.89
Q2 2008
0.85
Q3 2008
0.88
Q4 2008
0.89
Q1 2009
0.89

Here is how cash flow multiples are trending in the Hoover area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.12
Q2 2007
3.51
Q3 2007
3.43
Q4 2007
3.89
Q1 2008
3.62
Q2 2008
3.71
Q3 2008
3.65
Q4 2008
3.75
Q1 2009
3.66

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