Buying a Business
Cost to Buy a Business in Round Rock
Considering purchasing a company in Round Rock, Texas? You're no doubt wondering how much a typical Round Rock, Texas business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what it costs to buy a business in Round Rock.
BizBuySell.com is the Internet's largest and most heavily trafficked business for sale marketplace. 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 Texas, check out the BizBuySell Texas listings to see the latest business-for-sale listings for Round Rock and other Texas municipalities.
Business Valuations in Round Rock, TX
According to BizBuySell.com, the median asking price for an Round Rock business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $350,000.
That was based on 195 listings in the Austin-Round Rock, TX metro area. As such, some of the businesses used to derive the median valuation might be outside of Round Rock, but they are in the area and so are probably representative of Round Rock 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 Round Rock business for much less. Having said that, some Round Rock businesses may cost much more.
Another thing you should know is that this is the asking price for an Round Rock 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 ratios depend on deal specifics but typically might be between 0.85 and 0.90. Given this industry norm, if a small business owner were to list a company for $300,000, it might sell for between $255,000 and $270,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Austin-Round Rock, TX metro area for the last 8 quarters.
Round Rock, TX Revenue Multiples
In the Austin-Round Rock, TX metro area, businesses will usually sell for 0.95 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this area of the country.
In other words, a firm with revenues of $200,000 might list for $190,155. Remember, however, that this is simply an average for revenue multiples in Round Rock and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are tracking in the Round Rock area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $550,000 in Q4 2008.
Cash Flow Multiples In Round Rock, TX
Another popular way to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for businesses listed in the Austin-Round Rock, TX metro area was 3.82.
So, a business with cash flows of $120,000 might have an asking price of $458,618. 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 Round Rock area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Round Rock, BizBuySell.com reports that the median cash flow for Round Rock area businesses was $120,000 in Q4 2008.
Things to Consider When Buying a Business in Round Rock, TX
When buying a business, it's often a good idea to have the previous owner stay on for a transition period after you buy the business. This can range from a couple of weeks to several months. The goal is to make sure you are well-trained on how to run the business and that you minimize any revenue or customer attrition. Most sellers are willing to do this. After all, they want to see their company continue to do well even after they are no longer involved in the business. This advice on how to structure a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Round Rock, TX 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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