Buying a Business
Cost to Buy a Business in Long Beach
Considering purchasing a company in Long Beach, California? Your first question will probably be "How much does it cost to buy a business in Long Beach?"
Luckily, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Long Beach.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. The vast majority of business brokers in the country put their business listings on BizBuySell.com. They also have many FSBO (for sale by owner) business-for-sale listings.
If you are looking to buy a business in California, check out the BizBuySell California listings to to be on the inside track with the newest business-for-sale listings for Long Beach and other California cities.
Long Beach, CA Business Valuations
According to BizBuySell.com, the median asking price for an Long Beach business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $238,000.
That was based on 3915 listings in the Los Angeles-Long Beach-Santa Ana, CA metro area. Many of the businesses in the dataset are outside of Long Beach, but they are in the area and so are probably representative of Long Beach business valuations.
Note that this is the median asking price for a business. If you are in the market to buy a company, you may be able to buy an Long Beach business for much less. At the same time, some Long Beach businesses may cost much more.
Another thing you should know is that this is the asking price for an Long Beach business. Typically, when a small business owner lists a company for sale, they start with an asking price that is higher than the final sale price. The sale-price-to-asking-price ratio varies considerably but typically might be between 0.85 and 0.90. For example, a business listed for $250,000 would go for between $212,500 and $225,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area for the last 8 quarters.
Revenue Multiples In Long Beach, CA
In the Los Angeles-Long Beach-Santa Ana, CA metro area, businesses will usually sell for 0.79 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this metro area.
In other words, a firm with revenues of $200,000 might list for $158,663. Remember, however, that this is just an average for revenue multiples in the area. Some companies will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are tracking in the Long Beach area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $380,000 in Q4 2008.
Cash Flow Multiples In Long Beach, CA
Another popular way to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area was 3.01.
So, a business with cash flows of $120,000 might have an asking price of $361,467. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the Long Beach area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Long Beach, BizBuySell.com determined that the median cash flow for Long Beach area businesses was $96,000 in Q4 2008.
Tips for Long Beach, CA Business Buyers
When buying a business, always start with a self assessment. Ask yourself why you want to buy a business. What types of work activities do you like and what kind of lifestyle do you want to pursue? Be sure to include your family in the assessment. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Long Beach, CA Businesses
If you have a specific business in mind and want to look at comparables in the area, we recommend the BizBuySell.com Business Valuation Tool. You can refine the dataset that generates business valuations to meet your specific needs, and access to the tool is very affordable -- less than $100.
More Information on BizBuySell.com's Quarterly Reports
The BizBuySell Insight Report is a nationally-recognized economic indicator that tracks the health of the U.S. small business economy. If you find this data interesting, be sure to visit BizBuySell.com Insights Report for more information.
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