Buying a Business
Cost to Buy a Business in Davidson
Planning on buying a Davidson, Tennessee business? You're no doubt wondering how much a typical Davidson, Tennessee business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what it costs to buy a business in Davidson.
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 Tennessee, check out the BizBuySell Tennessee listings to see the latest business-for-sale listings for Davidson and other Tennessee towns.
Business Valuations in Davidson, TN
According to BizBuySell.com, the median asking price for an Davidson business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $315,000.
That was based on 235 listings in the Nashville-Davidson--Murfreesboro, TN metro area. Many of the businesses in the dataset are outside of Davidson, but they are in the area and so are probably representative of Davidson 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 Davidson business for much less. At the same time, some Davidson businesses may cost much more.
Another thing you should know is that this is the asking price for an Davidson business. Typically, when a 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 ratios depend on deal specifics 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 in the Nashville-Davidson--Murfreesboro, TN metro area for the last 8 quarters.
Revenue Multiples In Davidson, TN
In the Nashville-Davidson--Murfreesboro, TN metro area, businesses will usually sell for 0.92 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q4 2008 in this part of the country.
In other words, a business that has revenues of $200,000 might list for $183,843. Remember, however, that this is in fact an average for revenue multiples in Davidson 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 Davidson area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $531,389 in Q4 2008.
Cash Flow Multiples In Davidson, TN
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 Nashville-Davidson--Murfreesboro, TN metro area was 3.96.
So, a business with cash flows of $120,000 might have an asking price of $475,402. That math only works if the business sells for the area's average multiple. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the Davidson area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Davidson, BizBuySell.com reports that the median cash flow for Davidson area businesses was $113,000 in Q4 2008.
Things to Consider When Buying a Business in Davidson, TN
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 Davidson, TN Businesses
If you have a specific business in mind and want to get a ballpark business valuation, 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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