Q1 2009 Costs to Buy a Business
How Much Is My Scottsdale Business Worth?
BizBuySell.com has just released its Scottsdale, Arizona business valuation data for First Quarter 2009.
Scottsdale, AZ Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, Scottsdale business-for-sale listings in Q1 2009 had a median asking price of $210,000.
That compares to a median ask price of $220,000 in Q1 2008. Given that Scottsdale, AZ median business asking prices appear to be dropping, it suggests that larger Scottsdale 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 Scottsdale company for much less. Alternatively, some Scottsdale businesses may be selling for much more.
Also, this is the asking price for a Scottsdale 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. This suggests that a company listed for $325,000 might be purchased for between $276,250 and $292,500.
Number of Scottsdale Businesses for Sale in the Dataset
The study data comprised 1323 listings in the Phoenix-Mesa-Scottsdale, AZ metro area. As such, some of the businesses used to derive the median valuation might be outside of Scottsdale, but they are nearby and so are probably representative of Scottsdale business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Scottsdale spanned 1479 listings. The downward trend in the number of Scottsdale business-for-sale listings is indicative of the current down economy.
Scottsdale, AZ Q1 2009 Revenue Multiples
In the Phoenix-Mesa-Scottsdale, AZ metro area, businesses will typically sell for 0.89 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q1 2009 in this metro area.
In other words, a business that has revenues of $200,000 might list for $177,590. Remember, however, that this is only an average for revenue multiples in Scottsdale 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 $330,000 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.88 and the median revenue for listed businesses was $320,000.
Q1 2009 Cash Flow Multiples In Scottsdale, AZ
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Phoenix-Mesa-Scottsdale, AZ metro area was 3.27.
So, a business with cash flows of $150,000 might have an asking price of $490,247. That's only if the firm complies with the local average. Actual cash flow multiples are based on business specifics.
In case you were wondering what typical cash flows are for a business in Scottsdale, BizBuySell.com reports that the median cash flow for Scottsdale area businesses was $82,265 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.27 and the median cash flow was $82,425.
Things to Consider When Selling a Business in Scottsdale, AZ
Buyers want a business that is easy to understand and easy to run. Prior to selling a business, be sure to prepare a thorough operations manual that explains in detail how a new buyer would run the business. This helpful advice on how to buy a business comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Scottsdale, AZ Businesses
If you are contemplating buying a business or selling a business and would like to look at comparables in the area, 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 Scottsdale, AZ Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Phoenix-Mesa-Scottsdale, AZ metro area for the last 9 quarters.
Here is how median revenue multiples are moving in the Scottsdale area, based on BizBuySell.com's quarterly reports.
Here is how cash flow multiples are trending in the Scottsdale area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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