Buying a Business
Cost to Buy a Business in Buffalo
If you want to buy a business in Buffalo, New York, you've come to the right place to get statistics and trend data on Buffalo, New York business-for-sale transactions.
Fortunately, a company called BizBuySell.com has made some data available on what businesses are going for in Buffalo.
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. 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 New York, check out the BizBuySell New York listings to see the latest business-for-sale listings for Buffalo and other New York towns.
Business Valuations in Buffalo, NY
Based on the BizBuySell.com data, the median asking price for an Buffalo business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $355,000.
That was based on 49 listings in the Buffalo-Niagara Falls, NY metro area. Many of the businesses in the dataset are outside of Buffalo, but they are in the area and so are probably representative of Buffalo 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 Buffalo business for much less. At the same time, some Buffalo businesses may cost much more.
Importantly, this is the asking price for an Buffalo business. Typically, when a small business owner lists a company for sale, they start with an asking price that is higher than the eventual sale price. The sale-price-to-asking-price ratios depend on deal specifics but typically might be between 0.85 and 0.90. This suggests that a business listed for $325,000 might be purchased for between $276,250 and $292,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Buffalo-Niagara Falls, NY metro area for the last 8 quarters.
Buffalo, NY Revenue Multiples
In the Buffalo-Niagara Falls, NY metro area, businesses will usually sell for 1.11 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 $221,126. Remember, however, that this is simply 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 Buffalo area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $317,000 in Q4 2008.
Cash Flow Multiples In Buffalo, NY
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 Buffalo-Niagara Falls, NY metro area was 3.59.
So, a business with cash flows of $120,000 might have an asking price of $431,373. 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 Buffalo area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Buffalo, BizBuySell.com reports that the median cash flow for Buffalo area businesses was $97,000 in Q4 2008.
Things to Consider When Buying a Business in Buffalo, NY
Don't buy a company simply because you love the type of business. In buying a business, you are buying a livelihood that will need to meet you salary expecations. So, before you move forward, consider how much you can realistically expect to pull out of the business and whether thay will support your desired lifestyle. Always be conservative in making these projections. This helpful business buying counsel comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Buffalo, NY 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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