Buying a Business
Cost to Buy a Business in Contra Costa
If you want to buy a business in Contra Costa, California, you're no doubt wondering how much a typical Contra Costa, California business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what it costs to buy a business in Contra Costa.
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 are looking to buy a business in California, check out the BizBuySell California listings to get instant access to business-for-sale listings for Contra Costa and other California towns.
Contra Costa, CA Business Valuations
According to BizBuySell.com, the median asking price for an Contra Costa 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. As such, some of the businesses used to derive the median valuation might be outside of Contra Costa, but they are nearby and so are probably representative of Contra Costa 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 Contra Costa business for much less. At the same time, some Contra Costa businesses may cost much more.
Importantly, this is the asking price for an Contra Costa business. Typically, when an entrepreneur 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 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 Contra Costa-Alameda-Solano, CA metro area for the last 8 quarters.
Revenue Multiples In Contra Costa, CA
In the Contra Costa-Alameda-Solano, CA metro area, businesses will usually sell for 0.70 times the selling company's revenues. The data indicates that is 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 $139,777. Keep in mind that this is just an average for revenue multiples in Contra Costa and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Contra Costa 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 Contra Costa, 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 math only works if the business sells for the area's average multiple. 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 Contra Costa area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Contra Costa, BizBuySell.com reports that the median cash flow for Contra Costa area businesses was $100,000 in Q4 2008.
Things to Consider When Buying a Business in Contra Costa, CA
Never underestimate what it will take to be a successful entrepreneur. It's important to understand that owners work long hours, and, in many casees, it can take a while before a business generates sufficient cash flow to pay the owner well. This useful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Contra Costa, CA 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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