September 19, 2020  
 
  Articles for Entrepreneurs  
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Q3 2009 Business Valuation Data

 

 

Sell My Detroit, MI Business

We just received the latest Detroit, Michigan statistics on business valuations for Third Quarter 2009.

Median Ask Prices for Detroit, MI Businesses

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Detroit-Warren-Livonia, MI metro area for the last 11 quarters.

Quarter

Median Ask

Q1 2007

$212,500

Q2 2007

$200,000

Q3 2007

$200,000

Q4 2007

$200,000

Q1 2008

$199,900

Q2 2008

$241,000

Q3 2008

$247,000

Q4 2008

$231,000

Q1 2009

$243,500

Q2 2009

$200,000

Q3 2009

$238,000

As you can see from the chart above, Detroit business-for-sale listings in Q3 2009 had a median asking price of $238,000.

That compares to a median ask price of $247,000 in Q3 2008. The lower median asking price in last quarter suggests that Detroit, MI sellers are dropping their asking prices in light of market conditions. This is making it possible for more business-for-sale transactions to close.

Revenue Multiples for Detroit, MI Businesses

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

Quarter

Revenue Multiple

Q1 2007

0.86

Q2 2007

0.73

Q3 2007

0.92

Q4 2007

0.93

Q1 2008

0.91

Q2 2008

0.98

Q3 2008

0.97

Q4 2008

0.91

Q1 2009

0.87

Q2 2009

0.84

Q3 2009

0.84

In the Detroit-Warren-Livonia, MI metro area, businesses will typically sell for 0.84 times the selling company's revenues. As shown in the chart above, that was the mean revenue multiple for Q3 2009 in this area of the country.

In other words, a business that has revenues of $150,000 might list for $125,894. Keep in mind that this is just 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 Detroit business-for-sale listings was $389,138 in Q3 2009.

To give this some context, the Q3 2008 revenue multiple was 0.97 and the median revenue for listed Detroit businesses was $350,550.

Cash Flow Multiples for Detroit, MI Businesses

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

Quarter

Median Cash
Flow Multiple

Q1 2007

3.28

Q2 2007

3.67

Q3 2007

3.79

Q4 2007

3.72

Q1 2008

3.39

Q2 2008

3.68

Q3 2008

3.68

Q4 2008

3.48

Q1 2009

3.55

Q2 2009

3.42

Q3 2009

4.01

As you probably know, cash flow multiples are another common way to value a business.

For Q3 2009, the average cash flow multiple for listed businesses in the Detroit-Warren-Livonia, MI metro area was 4.01.

So, a business with cash flows of $110,000 might list for $441,475. That's only if the firm complies with the local average. Most businesses will not conform to industry- or area averages.

If you are interested in what cash flows are for a business in Detroit, BizBuySell.com reports that the median cash flow for Detroit area businesses was $85,000 in Q3 2009. In Q3 2008, Detroit cash flow multiples averaged 3.68 and the median cash flow was $83,000.

Number of Detroit Businesses for Sale in the Dataset

The study data comprised 164 listings in the Detroit-Warren-Livonia, MI metro area. As such, some of the businesses used to derive the median valuation might be outside of Detroit, but they are nearby and so are likely representative of Detroit business valuations.

One year ago, in Q3 2008, the BizBuySell.com dataset for Detroit spanned 169 listings. The downward trend in the number of Detroit business-for-sale listings is indicative of the current down economy.

Can I Sell My Detroit, MI Business Now?

The market is turning around and it's a great time to sell. Still, you may have to be creative. For example, with credit still relatively tight, you might want to consider offing seller financing to a buyer. This will improve your odds of closing a business-for-sale transaction. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.

Business Valuations for Detroit, MI Businesses

If you are contemplating buying a business or selling a business and would like to look at completed transaction sale price comparables in the area, we recommend the BizBuySell.com Business Valuation Tool. Based on your specific criteria, you can modify the company dataset that creates business valuation estimates. Access to the tool is very reasonable -- costing less than $100.

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.

 

 

 

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