Buying a Business
Cost to Buy a Business in Austin
Considering purchasing a company in Austin, Texas? You're no doubt wondering how much a typical Austin, Texas business costs to buy.
The good news is a company called BizBuySell.com has made some data available on what it costs to buy a business in Austin.
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 want to buy a company in Texas, peruse the BizBuySell Texas listings to see the latest business-for-sale listings for Austin and other Texas towns.
Austin, TX Business Valuations
According to BizBuySell.com, the median asking price for an Austin 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 Austin, but they are close by and so are likely representative of Austin 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 Austin business for much less. The flip side is that some Austin businesses may cost much more.
Another thing you should know is that this is the asking price for an Austin business. Typically, when a small business owner lists a company 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. Based on this rule of thumb, a business listed for $225,000 might sell for between $191,250 and $202,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses for sale in the Austin-Round Rock, TX metro area for the last 8 quarters.
Revenue Multiples In Austin, TX
In the Austin-Round Rock, TX metro area, companies will typically sell for 0.95 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 $190,155. Keep in mind that this is just 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 Austin 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 Austin, TX
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 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. Actual cash flow multiples are based on business specifics.
Here is how cash flow multiples are trending in the Austin area, based on BizBuySell.com's quarterly reports.
In case you were wondering what typical cash flows are for a business in Austin, BizBuySell.com found that the median cash flow for Austin area businesses was $120,000 in Q4 2008.
Things to Consider When Buying a Business in Austin, TX
If you are looking to buy a business, be sure to contact business intermediaries who represent selling businesses within your targeted market. They will notify you of available companies that meet your criteria and qualifications. Most business brokers or intermediaries work for the seller and are paid by the seller. That means you can enjoy the luxury of their services at no cost. This helpful advice was provided by Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Austin, TX 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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