Q1 2009 Costs to Buy a Business

How Much Is My Chicago Business Worth?

We just received the latest Chicago, Illinois business valuation data for First Quarter 2009.

Q1 2009 Business Valuations in Chicago, IL

Based on data compiled by BizBuySell.com, Chicago business-for-sale listings in Q1 2009 had a median asking price of $275,000.

That compares to a median ask price of $260,000 in Q1 2008. Because the median ask price for businesses for sale in Chicago has risen year over year, we can conclude that many smaller firms in Chicago are holding off on selling.

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

Also, this is the asking price for a Chicago business. When an 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 depends on deal specifics. So, a business listed for $100,000 might sell for between $85,000 and $90,000.

Number of Chicago Businesses for Sale in the Dataset

The study data comprised 582 listings in the Chicago-Naperville-Joliet, IL-IN-WI metro area. As such, some of the businesses used to derive the median valuation might be outside of Chicago, but they are in the area and so are likely representative of Chicago business valuations.

In Q1 2008, just one year ago, there were 601 Chicago listings in the BizBuySell.com dataset. As a result of the recession, fewer Chicago business owners are selling because they hope to weather the storm and sell after the economy turns around.

Q1 2009 Revenue Multiples In Chicago, IL

In the Chicago-Naperville-Joliet, IL-IN-WI metro area, companies will usually sell for 0.82 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 $163,591. Keep in mind that this is simply an average for revenue multiples in the area. Some small businesses 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 $450,000 in Q1 2009.

As a reference point, the Q1 2008 revenue multiple was 0.85 and the median revenue for listed businesses was $407,644.

Q1 2009 Cash Flow Multiples In Chicago, IL

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

For Q1 2009, the average cash flow multiple for listed businesses in the Chicago-Naperville-Joliet, IL-IN-WI metro area was 3.28.

So, a firm with cash flows of $150,000 might have an asking price of $491,836. That's only if the firm complies with the local average. The actual distribution on revenue multiples for a given set of businesses can be quite wide-ranging.

If you are interested in what cash flows are for a business in Chicago, BizBuySell.com reports that the median cash flow for Chicago area businesses was $100,448 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.38 and the median cash flow was $100,000.

Tips for Chicago, IL Business Sellers

It's critical to keep the potential sale of your business as confidential as possible. If that confidentiality is compromised, you risk losing customers, employees and vendors. Loose lips sink ships...and sink business-for-sale transactions as well! This useful business selling advice comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.

Business Valuations for Chicago, IL 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 Chicago, IL Business Valuations

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Chicago-Naperville-Joliet, IL-IN-WI metro area for the last 9 quarters.

Quarter
Median Ask
Q1 2007
$250,000
Q2 2007
$285,000
Q3 2007
$275,000
Q4 2007
$250,000
Q1 2008
$260,000
Q2 2008
$280,000
Q3 2008
$292,000
Q4 2008
$275,000
Q1 2009
$275,000

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

Quarter
Revenue Multiple
Q1 2007
1.26
Q2 2007
1.19
Q3 2007
0.90
Q4 2007
0.82
Q1 2008
0.85
Q2 2008
0.84
Q3 2008
0.86
Q4 2008
0.80
Q1 2009
0.82

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

Quarter
Median Cash
Flow Multiple
Q1 2007
4.33
Q2 2007
3.94
Q3 2007
3.65
Q4 2007
3.44
Q1 2008
3.38
Q2 2008
3.32
Q3 2008
3.42
Q4 2008
3.23
Q1 2009
3.28

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