Q1 2009 Costs to Buy a Business
How Much Is My Jefferson County Business Worth?
BizBuySell.com has just released its Jefferson County, Indiana business valuation data for First Quarter 2009.
Q1 2009 Business Valuations in Jefferson County, IN
Based on data compiled by BizBuySell.com, Jefferson County business-for-sale listings in Q1 2009 had a median asking price of $232,500.
That compares to a median ask price of $250,000 in Q1 2008. Given that Jefferson County, IN median business asking prices appear to be dropping, it suggests that larger Jefferson County 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 Jefferson County company for much less. However, some Jefferson County businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Jefferson County 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. So, a business listed for $100,000 might sell for between $85,000 and $90,000.
Number of Jefferson County Businesses for Sale in the Dataset
The study data comprised 76 listings in the Louisville-Jefferson County, KY-IN metro area. As such, some of the businesses used to derive the median valuation might be outside of Jefferson County, but they are close by and so are likely representative of Jefferson County business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Jefferson County spanned 105 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Jefferson County business-for-sale listings.
Q1 2009 Revenue Multiples In Jefferson County, IN
In the Louisville-Jefferson County, KY-IN metro area, small businesses will typically sell for 0.88 times the selling company's revenues. This was the mean revenue multiple for Q1 2009 in this part of the country.
In other words, a firm with revenues of $200,000 might list for $176,618. Remember, however, that this is only an average for revenue multiples in Jefferson County and surrounding communities. 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 $363,655 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.83 and the median revenue for listed businesses was $400,000.
Q1 2009 Cash Flow Multiples In Jefferson County, IN
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Louisville-Jefferson County, KY-IN metro area was 4.14.
So, a company with cash flows of $150,000 might have an asking price of $621,369. That calculation is dependent on the business selling for the area's average multiple. Actual cash flow multiples are based on business specifics.
In case you were wondering what typical cash flows are for a business in Jefferson County, BizBuySell.com determined that the median cash flow for Jefferson County area businesses was $75,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 4.24 and the median cash flow was $75,000.
Things to Consider When Selling a Business in Jefferson County, IN
Most business sales involve seller financing, especially in this enviroment when credit is tight. You have to finance as much as 70% of the purchase price. Typically, you would structure the deal to be paid off in full within four to five years. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Jefferson County, IN 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 published every quarter. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for additional information.
Historical Data for Jefferson County, IN Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Louisville-Jefferson County, KY-IN metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Jefferson County area, based on BizBuySell.com's data.
The table below shows how cash flow multiples are trending in the Jefferson County area, based on BizBuySell.com's quarterly reports.
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