Buying a Business
Cost to Buy a Business in Philadelphia
Considering purchasing a company in Philadelphia, Pennsylvania? You're no doubt wondering how much a typical Philadelphia, Pennsylvania business costs to buy.
The good news is the folks at BizBuySell.com have made some data available on what it costs to buy a business in Philadelphia.
BizBuySell.com is the biggest business-for-sale listings site on the Internet, offering over 50,000 businesses for sale at any given time. The vast majority of business brokers in the country put their business listings on BizBuySell.com. In addition, many business owners who are selling on their own, without a broker, will place listings on BizBuySell.com.
If you are looking to buy a business in Pennsylvania, check out the BizBuySell Pennsylvania listings to get instant access to business-for-sale listings for Philadelphia and other Pennsylvania towns.
Philadelphia, PA Business Valuations
According to BizBuySell.com, the median asking price for an Philadelphia business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $275,000.
That was based on 955 listings in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area. Many of the businesses in the dataset are outside of Philadelphia, but they are in the area and so are probably representative of Philadelphia 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 Philadelphia business for much less. Having said that, some Philadelphia businesses may cost much more.
Importantly, this is the asking price for an Philadelphia business. Typically, when a business owner lists a business for sale, they start with an asking price that is higher than the ultimate sale price. The sale-price-to-asking-price ratio varies considerably but typically might be between 0.85 and 0.90. So, a company listed for $125,000 would often sell for between $106,250 and $112,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area for the last 8 quarters.
Revenue Multiples In Philadelphia, PA
In the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area, businesses will typically sell for 0.90 times the selling company's revenues. This was 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 $179,130. Remember, however, that this is strictly an average for revenue multiples in the area. Some entities will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are tracking in the Philadelphia area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $425,000 in Q4 2008.
Cash Flow Multiples In Philadelphia, PA
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 Philadelphia-Camden-Wilmington, PA-NJ-DE-MD metro area was 3.31.
So, a business with cash flows of $120,000 might have an asking price of $396,623. 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 Philadelphia area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Philadelphia, BizBuySell.com reports that the median cash flow for Philadelphia area businesses was $109,000 in Q4 2008.
Things to Consider When Buying a Business in Philadelphia, PA
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 Philadelphia, PA Businesses
If you have a specific business in mind and want to get a ballpark business valuation, 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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