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Small Business Times Milwaukee
April 8, 2008
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Milwaukee area businesses for sale held their value in the first quarter,
but increased pressures from the credit crunch could cut into those multiples
in the second quarter, according to BizBuySell.com, a web service that
lists businesses for sale.
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The median asking price for businesses for sale in the Milwaukee area
through the web site now stands at $392,500, which is up from $335,000
in the fourth quarter of 2007.
The data is based on 98 Milwaukee-area businesses that are currently listed
at BizBuySell.com. Those listings include listings from local business
brokers, as well as "for sale by owner" listings that have been
listed by the business owner without the assistance of a business broker.
The first-quarter Milwaukee area businesses listed had a median revenue
of $517,540, up from $500,736 in the previous quarter. The median cash
flow, meaning the money that comes out of the business over the course
of a year, is $118,334, vs. $118,796 in the previous quarter.
According to BizBuySell.com, business owners in the Milwaukee area will
typically ask for, on average, a revenue multiple of 1.04 (up from 0.97
in the prior quarter) and a cash flow multiple of 3.74 (up from 3.56 in
the prior quarter).
Nationally, business valuations are down. The median asking price for
a small business in the United States declined to $250,000 at the end
of the fourth quarter, a $5,000 decrease relative to the prior quarter.
"The business valuations in Milwaukee are materially different from
what we are seeing on a national basis. Milwaukee's valuations are much
higher than the national average.
In addition, the market for Milwaukee small businesses appears to be changing,
with increasing valuations relative to the previous quarter. On a national
basis, valuations are declining," said Mike Handelsman, general manager
of BizBuySell.com.
"We expect there to be downward pressure on Milwaukee business valuations
going forward as retiring baby boomers put their businesses up for sale
to fund their retirements. Our internal research suggests that one out
of three active small businesses is owned by a baby boomer. The ongoing
credit crunch is also empowering buyers who do have cash, allowing them
to buy businesses at a lower price than they might have had to pay in
the past. For all of these reasons, it's a buyer's market right now,"
Handelsman said.
Copyright © 2008. Small Business Times.
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