Q1 2009 Costs to Buy a Business

How Much Is My Orange County Business Worth?

We just received the latest Orange County, California business valuation data for First Quarter 2009.

Orange County, CA Q1 2009 Business Valuations

According to statistics issued by BizBuySell.com, Orange County business-for-sale listings in Q1 2009 had a median asking price of $200,000.

That compares to a median ask price of $220,000 in Q1 2008. Given that Orange County, CA median business asking prices appear to be dropping, it suggests that larger Orange County businesses in may be holding off on selling until the economy turns around.

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

Another thing to remember is that this is the asking price for a Orange 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 Orange County Businesses for Sale in the Dataset

The study data comprised 1051 listings in the Orange County, CA metro area. Many of the businesses in the dataset are outside of Orange County, but they are close by and so are probably representative of Orange County business valuations.

One year ago, in Q1 2008, the BizBuySell.com dataset for Orange County spanned 1053 listings. The downward trend in the number of Orange County business-for-sale listings is indicative of the current down economy.

Q1 2009 Revenue Multiples In Orange County, CA

In the Orange County, CA metro area, companies will typically sell for 0.75 times the selling company's revenues. That was the mean revenue multiple for Q1 2009 in this part of the country.

In other words, a business that has revenues of $200,000 might list for $150,222. Remember, however, that this is just an average for revenue multiples in Orange County and surrounding communities. Some companies 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 $350,000 in Q1 2009.

To give this some context, the Q1 2008 revenue multiple was 0.81 and the median revenue for listed businesses was $341,002.

Q1 2009 Cash Flow Multiples In Orange County, CA

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

For Q1 2009, the average cash flow multiple for listed businesses in the Orange County, CA metro area was 2.89.

So, a firm with cash flows of $150,000 might have an asking price of $434,207. That's only if the firm complies with the local average. Cash flow multiples will usually vary considerably based on many factors.

In case you were wondering what typical cash flows are for a business in Orange County, BizBuySell.com reports that the median cash flow for Orange County area businesses was $84,000 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.07 and the median cash flow was $85,000.

Things to Consider When Selling a Business in Orange County, CA

Selling a business can be a full-time job in and of itself. If you sell on your own, without assistance from a business broker, you may be distracted from running the business, which can result in a deterioriation in business results and a lower sale price. This helpful advice was provided by Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.

Business Valuations for Orange County, CA 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 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 Orange County, 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 Orange County, CA metro area for the last 9 quarters.

Quarter
Median Ask
Q1 2007
$199,000
Q2 2007
$199,995
Q1 2008
$220,000
Q2 2008
$222,450
Q3 2008
$220,000
Q4 2008
$220,000
Q1 2009
$200,000

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

Quarter
Revenue Multiple
Q1 2007
0.80
Q2 2007
0.82
Q1 2008
0.81
Q2 2008
0.83
Q3 2008
0.81
Q4 2008
0.76
Q1 2009
0.75

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

Quarter
Median Cash
Flow Multiple
Q1 2007
2.96
Q2 2007
3.00
Q1 2008
3.07
Q2 2008
3.12
Q3 2008
3.04
Q4 2008
2.97
Q1 2009
2.89

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