Buying a Business
Cost to Buy a Business in Cincinnati
Considering purchasing a company in Cincinnati, Ohio? You're no doubt wondering how much a typical Cincinnati, Ohio business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Cincinnati.
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 Ohio, take a look at the BizBuySell Ohio listings to see the latest business-for-sale listings for Cincinnati and other Ohio towns.
Business Valuations in Cincinnati, OH
Based on the BizBuySell.com data, the median asking price for an Cincinnati business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $210,000.
That was based on 108 listings in the Cincinnati-Middletown, OH-KY-IN metro area. As such, some of the businesses used to derive the median valuation might be outside of Cincinnati, but they are nearby and so are probably representative of Cincinnati 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 Cincinnati business for much less. Having said that, some Cincinnati businesses may cost much more.
Importantly, this is the asking price for an Cincinnati business. Typically, when a 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 ratio varies considerably but typically might be between 0.85 and 0.90. That means a business listed for $200,000 might be sold for between $170,000 and $180,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Cincinnati-Middletown, OH-KY-IN metro area for the last 8 quarters.
Revenue Multiples In Cincinnati, OH
In the Cincinnati-Middletown, OH-KY-IN metro area, businesses will typically sell for 0.71 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 $142,830. Remember, however, that this is strictly 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 changing in the Cincinnati area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $417,500 in Q4 2008.
Cash Flow Multiples In Cincinnati, OH
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 Cincinnati-Middletown, OH-KY-IN metro area was 3.81.
So, a business with cash flows of $120,000 might have an asking price of $456,712. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
Here is how cash flow multiples are trending in the Cincinnati area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Cincinnati, BizBuySell.com reports that the median cash flow for Cincinnati area businesses was $75,562 in Q4 2008.
Things to Consider When Buying a Business in Cincinnati, OH
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 Cincinnati, OH 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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