September 29, 2020  
 
  Articles for Entrepreneurs  
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Q3 2009 Business Valuation Data

 

 

Sell My Los Angeles, CA Business

We just received the latest Los Angeles, California business-for-sale statistics.

Median Ask Prices for Los Angeles, CA Businesses

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Los Angeles-Long Beach-Santa Ana, CA metro area for the last 11 quarters.

Quarter

Median Ask

Q1 2007

$215,000

Q2 2007

$225,000

Q3 2007

$225,000

Q4 2007

$225,000

Q1 2008

$225,000

Q2 2008

$225,000

Q3 2008

$229,999

Q4 2008

$238,000

Q1 2009

$230,000

Q2 2009

$235,000

Q3 2009

$235,000

As you can see from the chart above, Los Angeles business-for-sale listings in Q3 2009 had a median asking price of $235,000.

That compares to a median ask price of $229,999 in Q3 2008. With median asking prices for Los Angeles, CA businesses for sale trending up, we can conclude that only businesses that know they can command a premium price are willing to sell in this tough market.

Revenue Multiples for Los Angeles, CA Businesses

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

Quarter

Revenue Multiple

Q1 2007

0.83

Q2 2007

0.84

Q3 2007

0.85

Q4 2007

0.83

Q1 2008

0.83

Q2 2008

0.85

Q3 2008

0.83

Q4 2008

0.79

Q1 2009

0.79

Q2 2009

0.80

Q3 2009

0.78

In the Los Angeles-Long Beach-Santa Ana, CA metro area, small companies will usually sell for 0.78 times the selling company's revenues. The data from BizBuySell.com indicates that is 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 $116,781. Keep in mind that this is simply an average for revenue multiples in the area. Some firms will have higher revenue multiples and others will have lower revenue multiples.

According to BizBuySell.com, the median revenues for its Los Angeles business-for-sale listings was $380,000 in Q3 2009.

To put this in perspective, the Q3 2008 revenue multiple was 0.83 and the median revenue for listed Los Angeles businesses was $360,000.

Cash Flow Multiples for Los Angeles, CA Businesses

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

Quarter

Median Cash
Flow Multiple

Q1 2007

3.01

Q2 2007

3.03

Q3 2007

3.00

Q4 2007

3.00

Q1 2008

3.01

Q2 2008

3.06

Q3 2008

3.02

Q4 2008

3.01

Q1 2009

2.97

Q2 2009

2.99

Q3 2009

2.99

As you probably know, cash flow multiples are another useful method to value a business.

For Q3 2009, the average cash flow multiple for listed businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area was 2.99.

So, a business with cash flows of $110,000 might list for $329,319. That's only if the firm complies with the local average. The actual distribution on cash flow multiples for a given set of businesses can be quite wide-ranging.

In case you were wondering what typical cash flows are for a business in Los Angeles, BizBuySell.com determined that the median cash flow for Los Angeles area businesses was $95,000 in Q3 2009. In Q3 2008, Los Angeles cash flow multiples averaged 3.02 and the median cash flow was $92,166.

Number of Los Angeles Businesses for Sale in the Dataset

The study data comprised 3439 listings in the Los Angeles-Long Beach-Santa Ana, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Los Angeles, but they are close by and so are probably representative of Los Angeles business valuations.

One year ago, in Q3 2008, the BizBuySell.com dataset for Los Angeles spanned 4359 listings. The downward trend in the number of Los Angeles business-for-sale listings is indicative of the current down economy.

Can I Sell My Los Angeles, CA 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 Los Angeles, CA 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 published quarterly. If you find these trends interesting, take a moment to visit BizBuySell.com Insights Report for additional information.

 

 

 

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