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The median price asking price for a small business in Phoenix was $220,000 in first-quarter 2008, up $1,000 from late 2007. That's based on the 1,479 Phoenix-area businesses listed for sale at BizBuySell.com.

On a national level, the median asking price was $250,000 for the past quarter, down from $255,000.

The downward pressure on business valuations nationally is attributed to the tight credit market and retiring baby boomers selling their companies, according to Mike Handelsman, general manager of BizBuySell.com.

Other statistics gleaned from the Web site's first-quarter activity in Phoenix:

Businesses had median revenue of $320,000.
Median cash flow -- the money that comes out of the business over the course of a year -- was $82,425.
Business owners, on average, asked for a revenue multiple of 0.88 (down from 0.90 in the prior quarter) and a cash flow multiple of 3.27 (up from 3.21 in the prior quarter).
"The market for Phoenix small businesses appears to be changing, with increasing valuations relative to the previous quarter," Handelsman said.

"We expect there to be downward pressure on Phoenix 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," he said.

"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," Handelsman said. "For all of these reasons, it's a buyer's market right now."

San Francisco-based BizBuySell.com was founded in 1996 by Computer Projects Inc. and was acquired by LoopNet Inc. in 2004.

Copyright © 2008. The Business Journal of Phoenix.