Buying a Business
Cost to Buy a Business in Alameda
If you want to buy a business in Alameda, California, you're no doubt wondering how much a typical Alameda, California business costs to buy.
Luckily, the team at BizBuySell.com has made some data available on what businesses are going for in Alameda.
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 see the latest business-for-sale listings for Alameda and other California towns.
Business Valuations in Alameda, CA
According to BizBuySell.com, the median asking price for an Alameda business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $222,000.
That was based on 191 listings in the Contra Costa-Alameda-Solano, CA metro area. Many of the businesses in the dataset are outside of Alameda, but they are nearby and so are probably representative of Alameda 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 Alameda business for much less. At the same time, some Alameda businesses may cost much more.
Another thing you should know is that this is the asking price for an Alameda business. Typically, when a business owner lists a business 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 for sale in the Contra Costa-Alameda-Solano, CA metro area for the last 8 quarters.
Alameda, CA Revenue Multiples
In the Contra Costa-Alameda-Solano, CA metro area, businesses will usually sell for 0.70 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 business that has revenues of $200,000 might list for $139,777. Keep in mind that this is only 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 Alameda area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $443,827 in Q4 2008.
Cash Flow Multiples In Alameda, 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 Contra Costa-Alameda-Solano, CA metro area was 3.44.
So, a business with cash flows of $120,000 might have an asking price of $413,027. 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 Alameda area, based on BizBuySell.com's quarterly reports.
In case you were wondering what typical cash flows are for a business in Alameda, BizBuySell.com found that the median cash flow for Alameda area businesses was $100,000 in Q4 2008.
Things to Consider When Buying a Business in Alameda, CA
Credit is tight in this economy. Given that banks may be unwilling lend you money for the purchase of a business, you may want to look for seller financing. When a seller gives you financing, it shows they have confidence in the business, as well as confidence in your being able to run the business well enough to pay off the seller note. This advice on financing a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Alameda, CA Businesses
If you have a specific business in mind and want to value the business, 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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