September 27, 2020  
 
  Articles for Entrepreneurs  
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Q3 2009 Business Valuation Data

 

 

Sell My Washington, DC Business

We just received the latest Washington, District of Columbia business valuation data for Third Quarter 2009.

Median Ask Prices for Washington, DC Businesses

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area for the last 11 quarters.

Quarter

Median Ask

Q1 2007

$250,000

Q2 2007

$250,000

Q3 2007

$250,000

Q4 2007

$250,000

Q1 2008

$250,000

Q2 2008

$250,000

Q3 2008

$250,000

Q4 2008

$250,000

Q1 2009

$250,000

Q2 2009

$250,000

Q3 2009

$250,000

As shown in the table, Washington business-for-sale listings in Q3 2009 had a median asking price of $250,000.

That compares to a median ask price of $250,000 in Q3 2008. In spite of the difficult economy, Washington, DC business valuations appear to be relatively stable.

Revenue Multiples for Washington, DC Businesses

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

Quarter

Revenue Multiple

Q1 2007

0.75

Q2 2007

0.77

Q3 2007

0.75

Q4 2007

0.76

Q1 2008

0.72

Q2 2008

0.70

Q3 2008

0.71

Q4 2008

0.75

Q1 2009

0.75

Q2 2009

0.74

Q3 2009

0.74

In the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area, businesses will typically sell for 0.74 times the selling company's revenues. As shown in the chart above, that was the mean revenue multiple for Q3 2009 in this metro area.

In other words, a business that has revenues of $150,000 might list for $110,487. 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 Washington business-for-sale listings was $450,000 in Q3 2009.

To put this in perspective, the Q3 2008 revenue multiple was 0.71 and the median revenue for listed Washington businesses was $438,000.

Cash Flow Multiples for Washington, DC Businesses

Here is how cash flow multiples are trending in the Washington area, based on BizBuySell.com's quarterly reports.

Quarter

Median Cash
Flow Multiple

Q1 2007

3.19

Q2 2007

3.15

Q3 2007

3.14

Q4 2007

3.12

Q1 2008

3.13

Q2 2008

3.02

Q3 2008

2.98

Q4 2008

3.08

Q1 2009

3.04

Q2 2009

2.95

Q3 2009

3.03

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 Washington-Arlington-Alexandria, DC-VA-MD-WV metro area was 3.03.

So, a business with cash flows of $110,000 might list for $333,542. 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 Washington, BizBuySell.com reports that the median cash flow for Washington area businesses was $100,000 in Q3 2009. In Q3 2008, Washington cash flow multiples averaged 2.98 and the median cash flow was $100,000.

Number of Washington Businesses for Sale in the Dataset

The study data comprised 747 listings in the Washington-Arlington-Alexandria, DC-VA-MD-WV metro area. As such, some of the businesses used to derive the median valuation might be outside of Washington, but they are in the area and so are likely representative of Washington business valuations.

One year ago, in Q3 2008, the BizBuySell.com dataset for Washington spanned 1013 listings. In a market where you would think fewer business owners would be selling it's a bit surprising to see more Washington business-for-sale listings.

Can I Sell My Washington, DC Business Now?

You can absolutely sell in this market. Deals are getting done every day. You just have to structure the deal properly. In this down economy, performance based pricing is very popular. When buyers and sellers differ on valuations, tools such as earnouts, equity ownership or profit sharing can bridge the valuation gap. In effect, this is a deferred purchase price, but it's a way to get a deal done in a tough economic climate. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.

Business Valuations for Washington, DC 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 suggest you try 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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