Q1 2009 Costs to Buy a Business
How Much Is My Denver Business Worth?
We just received the latest Denver, Colorado statistics on business valuations for First Quarter 2009.
Q1 2009 Business Valuations in Denver, CO
Based on data compiled by BizBuySell.com, Denver business-for-sale listings in Q1 2009 had a median asking price of $250,000.
That compares to a median ask price of $250,000 in Q1 2008. In spite of the difficult economy, Denver, CO business valuations appear to be relatively stable.
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 Denver company for much less. However, some Denver businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Denver business. When a business owner lists a company 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 depends on deal specifics. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Denver Businesses for Sale in the Dataset
The study data comprised 342 listings in the Denver-Aurora, CO metro area. As such, some of the businesses used to derive the median valuation might be outside of Denver, but they are close by and so are likely representative of Denver business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Denver spanned 401 listings. The downward trend in the number of Denver business-for-sale listings is indicative of the current down economy.
Denver, CO Q1 2009 Revenue Multiples
In the Denver-Aurora, CO metro area, businesses 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 $158,478. Keep in mind that this is just an average for revenue multiples in the area. Some firms 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 $400,000 in Q1 2009.
To give this some context, the Q1 2008 revenue multiple was 0.88 and the median revenue for listed businesses was $382,060.
Q1 2009 Cash Flow Multiples In Denver, CO
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for businesses listed in the Denver-Aurora, CO metro area was 3.18.
So, a business with cash flows of $150,000 might have an asking price of $477,264. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.
If you are interested in what cash flows are for a business in Denver, BizBuySell.com determined that the median cash flow for Denver area businesses was $90,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.29 and the median cash flow was $91,048.
Things to Consider When Selling a Business in Denver, CO
When selling a business, valuations will be based on your profits. So, be sure to sell a business at a point when your profits are doing well if you want to sell for a great price. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Denver, CO Businesses
If you are contemplating buying a business or selling a business and would like to find out how much a business is worth, 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 Denver, CO Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Denver-Aurora, CO metro area for the last 9 quarters.
Here is how median revenue multiples are moving in the Denver area, based on BizBuySell.com's quarterly reports.
Here is how cash flow multiples are trending in the Denver area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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