Q1 2009 Costs to Buy a Business
How Much Is My Cambridge Business Worth?
We just received the latest Cambridge, Massachusetts business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Cambridge, MA
According to statistics issued by BizBuySell.com, Cambridge business-for-sale listings in Q1 2009 had a median asking price of $199,000.
That compares to a median ask price of $212,500 in Q1 2008. Given that Cambridge, MA median business asking prices appear to be dropping, it suggests that larger Cambridge businesses in may be holding off on selling until the economy turns around.
To be clear, this is the median asking price for a business. If you want to buy a business, you may be able to buy a Cambridge company for much less. However, some Cambridge businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Cambridge business. When a small 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. An owner who wants $275,000 might actually get between $233,750 and $247,500.
Number of Cambridge Businesses for Sale in the Dataset
The study data comprised 553 listings in the Boston-Cambridge-Quincy, MA-NH metro area. As such, some of the businesses used to derive the median valuation might be outside of Cambridge, but they are close by and so are probably representative of Cambridge business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Cambridge spanned 698 listings. The downward trend in the number of Cambridge business-for-sale listings is indicative of the current down economy.
Q1 2009 Revenue Multiples In Cambridge, MA
In the Boston-Cambridge-Quincy, MA-NH metro area, companies will typically sell for 0.79 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 $158,966. 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 $364,077 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.84 and the median revenue for listed businesses was $350,000.
Q1 2009 Cash Flow Multiples In Cambridge, MA
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Boston-Cambridge-Quincy, MA-NH metro area was 2.99.
So, a firm with cash flows of $150,000 might have an asking price of $448,519. That's only if the firm complies with the local average. Actual cash flow multiples are based on business specifics.
In case you were wondering what typical cash flows are for a business in Cambridge, BizBuySell.com reports that the median cash flow for Cambridge area businesses was $96,815 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 2.97 and the median cash flow was $100,000.
Tips for Cambridge, MA Business Sellers
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 Cambridge, MA 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 Cambridge, MA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Boston-Cambridge-Quincy, MA-NH metro area for the last 9 quarters.
Here is how median revenue multiples are moving in the Cambridge area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Cambridge area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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