Buying a Business
Cost to Buy a Business in New Haven
If you want to buy a business in New Haven, Connecticut, you're no doubt wondering how much a typical New Haven, Connecticut business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in New Haven.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. Their listings include almost all of the available listings from business brokers nationwide. They also have many FSBO (for sale by owner) business-for-sale listings.
If you are looking to buy a business in Connecticut, check out the BizBuySell Connecticut listings to see the latest business-for-sale listings for New Haven and other Connecticut towns.
Business Valuations in New Haven, CT
According to BizBuySell.com, the median asking price for an New Haven business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $175,000.
That was based on 117 listings in the New Haven-Milford, CT metro area. As such, some of the businesses used to derive the median valuation might be outside of New Haven, but they are nearby and so are probably representative of New Haven 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 New Haven business for much less. At the same time, some New Haven businesses may cost much more.
Importantly, this is the asking price for an New Haven business. Typically, when a company owner lists a business for sale, they start with an asking price that is higher than the eventual sale price. The sale-price-to-asking-price ratio varies considerably but typically might be between 0.85 and 0.90. That is to say, if an owner lists a business for $150,000, it might sell for between $127,500 and $135,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the New Haven-Milford, CT metro area for the last 8 quarters.
Revenue Multiples In New Haven, CT
In the New Haven-Milford, CT metro area, companies will typically sell for 0.70 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q4 2008 in this area of the country.
In other words, a business that has revenues of $200,000 might list for $140,273. Remember, however, that this is strictly an average for revenue multiples in the area. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the New Haven area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $330,000 in Q4 2008.
Cash Flow Multiples In New Haven, CT
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 New Haven-Milford, CT metro area was 2.84.
So, a business with cash flows of $120,000 might have an asking price of $341,200. 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 New Haven area, based on BizBuySell.com's quarterly reports.
Flow Multiple
In case you were wondering what typical cash flows are for a business in New Haven, BizBuySell.com reports that the median cash flow for New Haven area businesses was $81,000 in Q4 2008.
Things to Consider When Buying a Business in New Haven, CT
The baby boomer generation has made its mark in the business world. Aging boomers are now looking toward retirement, while many younger boomers find they're ready to be their own boss. It's a good idea to look at businesses that are being sold by aging business boomers as they may be motivated sellers. This helpful tip on buying a business comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for New Haven, CT 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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