Q1 2009 Costs to Buy a Business

How Much Is My Ontario Business Worth?

We just received the latest Ontario, California statistics on business valuations for First Quarter 2009.

Q1 2009 Business Valuations in Ontario, CA

According to statistics issued by BizBuySell.com, Ontario business-for-sale listings in Q1 2009 had a median asking price of $249,000.

That compares to a median ask price of $275,000 in Q1 2008. Given that Ontario, CA median business asking prices appear to be dropping, it suggests that larger Ontario 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 Ontario company for much less. Similarly, some Ontario businesses may be selling for much more.

Another thing to remember is that this is the asking price for a Ontario business. When a small business owner lists a business for sale, they typically set a price that ends up being more than the ultimate sale price. A sale-to-ask ratio typically might be between 0.85 and 0.90, but of course it depends on deal specifics. Based on this metric, a business initially priced at $225,000 might sell for between $191,250 and $202,500.

Number of Ontario Businesses for Sale in the Dataset

The study data comprised 601 listings in the Riverside-San Bernardino-Ontario, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Ontario, but they are in the area and so are probably representative of Ontario business valuations.

One year ago, in Q1 2008, the BizBuySell.com dataset for Ontario spanned 620 listings. The downward trend in the number of Ontario business-for-sale listings is indicative of the current down economy.

Ontario, CA Q1 2009 Revenue Multiples

In the Riverside-San Bernardino-Ontario, CA metro area, small businesses will typically sell for 0.81 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 $162,436. Remember, however, that this is simply an average for revenue multiples in Ontario 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 $435,000 in Q1 2009.

To put this in perspective, the Q1 2008 revenue multiple was 0.83 and the median revenue for listed businesses was $500,000.

Q1 2009 Cash Flow Multiples In Ontario, CA

Cash flow multiples are another useful method to value a business.

For Q1 2009, the average cash flow multiple for businesses listed in the Riverside-San Bernardino-Ontario, CA metro area was 3.16.

So, a business with cash flows of $150,000 might have an asking price of $473,375. That's only if the firm complies with the local average. Cash flow multiples will usually vary considerably based on many factors.

If you are interested in what cash flows are for a business in Ontario, BizBuySell.com reports that the median cash flow for Ontario area businesses was $100,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.25 and the median cash flow was $107,326.

Things to Consider When Selling a Business in Ontario, CA

When selling a business, think about how dependent the business is on you as the business owner. If the business is heavily dependent on your skills and your personal reputation, a buyer will pay less money for it. As such, it's important to make the business less dependent on you as you approach the time when you hope to sell. This advice on how to sell a company comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.

Business Valuations for Ontario, CA Businesses

If you are contemplating buying a business or selling a business and would like to get an estimated business valuation, 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 Ontario, CA Business Valuations

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Riverside-San Bernardino-Ontario, CA metro area for the last 9 quarters.

Quarter
Median Ask
Q1 2007
$270,000
Q2 2007
$214,000
Q3 2007
$250,000
Q4 2007
$270,000
Q1 2008
$275,000
Q2 2008
$275,000
Q3 2008
$250,000
Q4 2008
$250,000
Q1 2009
$249,000

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

Quarter
Revenue Multiple
Q1 2007
0.87
Q2 2007
0.92
Q3 2007
0.89
Q4 2007
0.89
Q1 2008
0.83
Q2 2008
0.87
Q3 2008
0.80
Q4 2008
0.82
Q1 2009
0.81

The table below shows how cash flow multiples are trending in the Ontario area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.11
Q2 2007
3.21
Q3 2007
3.21
Q4 2007
3.27
Q1 2008
3.25
Q2 2008
3.32
Q3 2008
3.06
Q4 2008
3.12
Q1 2009
3.16

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