Q1 2009 Costs to Buy a Business
How Much Is My Seattle Business Worth?
BizBuySell.com has just released its Seattle, Washington business valuation data for First Quarter 2009.
Seattle, WA Q1 2009 Business Valuations
According to statistics issued by BizBuySell.com, Seattle business-for-sale listings in Q1 2009 had a median asking price of $249,725.
That compares to a median ask price of $225,000 in Q1 2008. Since the median ask price for businesses for sale in Seattle has gone up year over year, we can conclude that many smaller businesses in Seattle are putting off selling.
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 Seattle company for much less. Similarly, some Seattle businesses may be selling for much more.
Another thing to remember is that this is the asking price for a Seattle business. When an 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 depends on deal specifics. An owner who wants $275,000 might actually get between $233,750 and $247,500.
Number of Seattle Businesses for Sale in the Dataset
The study data comprised 300 listings in the Seattle-Tacoma-Bellevue, WA metro area. As such, some of the businesses used to derive the median valuation might be outside of Seattle, but they are in the area and so are probably representative of Seattle business valuations.
One year ago, in Q1 2008, the BizBuySell.com dataset for Seattle spanned 334 listings. The downward trend in the number of Seattle business-for-sale listings is indicative of the current down economy.
Seattle, WA Q1 2009 Revenue Multiples
In the Seattle-Tacoma-Bellevue, WA metro area, businesses will typically sell for 0.73 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 firm with revenues of $200,000 might list for $145,903. Remember, however, that this is simply an average for revenue multiples in the area. Some entities 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 $450,000 in Q1 2009.
To put this in perspective, the Q1 2008 revenue multiple was 0.78 and the median revenue for listed businesses was $393,790.
Q1 2009 Cash Flow Multiples In Seattle, WA
Cash flow multiples are another common way to value a business.
For Q1 2009, the average cash flow multiple for listed businesses in the Seattle-Tacoma-Bellevue, WA metro area was 3.36.
So, a business with cash flows of $150,000 might have an asking price of $504,535. That calculation is dependent on the business selling for the area's average multiple. Cash flow multiples will usually vary considerably based on many factors.
If you are interested in what cash flows are for a business in Seattle, BizBuySell.com reports that the median cash flow for Seattle area businesses was $99,947 in Q1 2009. In Q1 2008, cash flow multiples clocked in at 3.24 and the median cash flow was $92,330.
Things to Consider When Selling a Business in Seattle, WA
When choosing a business broker, look for a broker that can maintain confidentiality and simultaneously get you the most qualified buyers. In addition, make sure the business broker has a good track record in facilitating negotiations between buyer and seller in a way that arrives at the best possible transaction. This helpful tip comes from Domenic Rinaldi, managing partner of Sun Acquisitions, a leading business brokerage firm.
Business Valuations for Seattle, WA 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 additional information.
Historical Data for Seattle, WA Business Valuations
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Seattle-Tacoma-Bellevue, WA metro area for the last 9 quarters.
Here is how median revenue multiples are changing in the Seattle area, based on BizBuySell.com's data.
Here is how cash flow multiples are trending in the Seattle area, based on BizBuySell.com's quarterly reports.
Flow Multiple
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