Q1 2009 Costs to Buy a Business
How Much Is My Minneapolis Business Worth?
We just received the latest Minneapolis, Minnesota business valuation data for First Quarter 2009.
Minneapolis, MN Q1 2009 Business Valuations
Based on data compiled by BizBuySell.com, Minneapolis business-for-sale listings in Q1 2009 had a median asking price of $275,000.
That compares to a median ask price of $265,000 in Q1 2008. Because the median ask price for businesses for sale in Minneapolis has risen year over year, we can conclude that many smaller firms in Minneapolis are holding off on selling.
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 Minneapolis company for much less. Alternatively, some Minneapolis businesses may be selling for much more.
Also, this is the asking price for a Minneapolis business. When a small 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 Minneapolis Businesses for Sale in the Dataset
The study data comprised 351 listings in the Minneapolis-St. Paul-Bloomington, MN-WI metro area. Many of the businesses in the dataset are outside of Minneapolis, but they are in the area and so are likely representative of Minneapolis business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Minneapolis spanned 333 listings. In a market where you would think fewer business owners would be selling, it's a bit surprising to see more Minneapolis business-for-sale listings.
Q1 2009 Revenue Multiples In Minneapolis, MN
In the Minneapolis-St. Paul-Bloomington, MN-WI metro area, businesses will usually sell for 0.94 times the selling company's revenues. The data indicates that is 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 $187,367. Remember, however, that this is just an average for revenue multiples in Minneapolis and surrounding communities. 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 $425,000 in Q1 2009.
As a reference point, the Q1 2008 revenue multiple was 0.85 and the median revenue for listed businesses was $397,687.
Q1 2009 Cash Flow Multiples In Minneapolis, MN
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Minneapolis-St. Paul-Bloomington, MN-WI metro area was 4.28.
So, a business with cash flows of $150,000 might have an asking price of $641,868. 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.
If you are interested in what cash flows are for a business in Minneapolis, BizBuySell.com reports that the median cash flow for Minneapolis area businesses was $86,382 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.99 and the median cash flow was $85,000.
Things to Consider When Selling a Business in Minneapolis, MN
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 Minneapolis, MN Businesses
If you are contemplating buying a business or selling a business and would like to value a specific business, 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 more information.
Historical Data for Minneapolis, MN Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses for sale in the Minneapolis-St. Paul-Bloomington, MN-WI metro area for the last 9 quarters.
Here is how median revenue multiples are trending in the Minneapolis area, based on BizBuySell.com's quarterly reports.
The table below shows how cash flow multiples are trending in the Minneapolis area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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