Buying a Business

Cost to Buy a Business in Sacramento

Considering purchasing a company in Sacramento, California? You're no doubt wondering how much a typical Sacramento, California business costs to buy.

Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Sacramento.

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. 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 see the latest business-for-sale listings for Sacramento and other California towns.

Sacramento, CA Business Valuations

According to BizBuySell.com, the median asking price for an Sacramento business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $229,450.

That was based on 200 listings in the Sacramento--Arden-Arcade--Roseville, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Sacramento, but they are in the area and so are probably representative of Sacramento 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 Sacramento business for much less. At the same time, some Sacramento businesses may cost much more.

Another thing you should know is that this is the asking price for an Sacramento business. Typically, when a business owner lists a business for sale, they start with an asking price that is higher than the contracted sale price. The sale-price-to-asking-price ratios depend on deal specifics but typically might be between 0.85 and 0.90. In other words, a business listed for $100,000 might sell for between $85,000 and $90,000.

If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Sacramento--Arden-Arcade--Roseville, CA metro area for the last 8 quarters.

Quarter
Median Ask
Q1 2007
$299,900
Q2 2007
$249,000
Q3 2007
$240,000
Q4 2007
$225,000
Q1 2008
$217,500
Q2 2008
$199,000
Q3 2008
$199,000
Q4 2008
$229,450

Revenue Multiples In Sacramento, CA

In the Sacramento--Arden-Arcade--Roseville, CA metro area, businesses will typically sell for 0.72 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 $143,948. Remember, however, that this is just an average for revenue multiples in the area. Some businesses will have higher revenue multiples and others will have lower revenue multiples.

Here is how median revenue multiples are trending in the Sacramento area, based on BizBuySell.com's data.

Quarter
Revenue Multiple
Q1 2007
0.67
Q2 2007
0.73
Q3 2007
0.76
Q4 2007
0.74
Q1 2008
0.81
Q2 2008
0.77
Q3 2008
0.76
Q4 2008
0.72

According to BizBuySell.com, the median revenues for its business-for-sale listings was $470,000 in Q4 2008.

Cash Flow Multiples In Sacramento, CA

Another common method to value a business is through cash flow multiples.

For Q4 2008, the average cash flow multiple for listed businesses in the Sacramento--Arden-Arcade--Roseville, CA metro area was 3.24.

So, a business with cash flows of $120,000 might have an asking price of $388,408. That's if the business fits the area average. The distribution on revenue multiples for a given set of businesses can be quite wide-ranging.

The table below shows how cash flow multiples are trending in the Sacramento area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
2.72
Q2 2007
3.19
Q3 2007
3.47
Q4 2007
3.65
Q1 2008
3.62
Q2 2008
3.33
Q3 2008
3.18
Q4 2008
3.24

If you are interested in what cash flows are for a business in Sacramento, BizBuySell.com determined that the median cash flow for Sacramento area businesses was $99,500 in Q4 2008.

Tips for Sacramento, CA Business Buyers

Before you start shopping for a business to buy, establish your acquisition criteria. It's important to define the parameters of your search. Include geographic requirements, criteria on the transaction size, and other business attributes that are important to you. Having set criteria will help you demonstrate that you are a thoughtful and committed buyer. It will also streamline your business buying process. This helpful advice on how to buy a business comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.

Business Valuations for Sacramento, CA Businesses

If you have a specific business in mind and want to find out how much a business is worth, 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 published on a quarterly basis. If you find this data interesting, be sure to visit BizBuySell.com Insights Report for additional information.

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