Q1 2009 Costs to Buy a Business
How Much Is My Phoenix Business Worth?
We just received the latest Phoenix, Arizona business-for-sale statistics.
Q1 2009 Business Valuations in Phoenix, AZ
Based on data compiled by BizBuySell.com, Phoenix business-for-sale listings in Q1 2009 had a median asking price of $210,000.
That compares to a median ask price of $220,000 in Q1 2008. Given that Phoenix, AZ median business asking prices appear to be dropping, it suggests that larger Phoenix businesses in may be holding off on selling until the economy turns around.
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 Phoenix company for much less. Alternatively, some Phoenix businesses may be selling for much more.
Also, this is the asking price for a Phoenix business. When a business owner 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. Given this industry statistic, if a small business owner were to list a company for $300,000, it might sell for between $255,000 and $270,000.
Number of Phoenix Businesses for Sale in the Dataset
The study data comprised 1323 listings in the Phoenix-Mesa-Scottsdale, AZ metro area. Many of the businesses in the dataset are outside of Phoenix, but they are in the area and so are likely representative of Phoenix business valuations.
In Q1 2008, just one year ago, there were 1479 Phoenix listings in the BizBuySell.com dataset. As a result of the recession, fewer Phoenix business owners are selling because they hope to weather the storm and sell after the economy turns around.
Q1 2009 Revenue Multiples In Phoenix, AZ
In the Phoenix-Mesa-Scottsdale, AZ metro area, small businesses will typically 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 business that has revenues of $200,000 might list for $177,590. Remember, however, that this is strictly 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 $330,000 in Q1 2009.
In terms of trending year over year, the Q1 2008 revenue multiple was 0.88 and the median revenue for listed businesses was $320,000.
Q1 2009 Cash Flow Multiples In Phoenix, AZ
Cash flow multiples are another popular technique to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Phoenix-Mesa-Scottsdale, AZ metro area was 3.27.
So, a business with cash flows of $150,000 might have an asking price of $490,247. That calculation is dependent on the business selling for the area's average multiple. In practice, cash flow multiples can vary considerably from one business to another.
In case you were wondering what typical cash flows are for a business in Phoenix, BizBuySell.com reports that the median cash flow for Phoenix area businesses was $82,265 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.27 and the median cash flow was $82,425.
Things to Consider When Selling a Business in Phoenix, AZ
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 Phoenix, 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 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 Phoenix, 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 Phoenix-Mesa-Scottsdale, AZ metro area for the last 9 quarters.
Here is how median revenue multiples are tracking in the Phoenix area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Phoenix area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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