Buying a Business

Cost to Buy a Business in Fresno

Planning on buying a Fresno, California business? You're no doubt wondering how much a typical Fresno, California business costs to buy.

Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Fresno.

BizBuySell.com is the largest online marketplace for business-for-sale transactions. When a business broker in a local city has a listing, the broker will typically post it 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 California, check out the BizBuySell California listings to see the latest business-for-sale listings for Fresno and other California cities.

Business Valuations in Fresno, CA

According to BizBuySell.com, the median asking price for an Fresno business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $367,500.

That was based on 38 listings in the Fresno, CA metro area. Many of the businesses in the dataset are outside of Fresno, but they are nearby and so are probably representative of Fresno 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 Fresno business for much less. At the same time, some Fresno businesses may cost much more.

Another thing you should know is that this is the asking price for an Fresno 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. 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 Fresno, CA metro area for the last 8 quarters.

Quarter
Median Ask
Q1 2007
$282,000
Q2 2007
$327,000
Q3 2007
$302,500
Q4 2007
$350,000
Q1 2008
$355,000
Q2 2008
$325,000
Q3 2008
$327,000
Q4 2008
$367,500

Fresno, CA Revenue Multiples

In the Fresno, CA metro area, businesses will typically sell for 0.70 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 $139,006. 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 moving in the Fresno area, based on BizBuySell.com's economic data.

Quarter
Revenue Multiple
Q1 2007
0.68
Q2 2007
1.01
Q3 2007
1.02
Q4 2007
0.88
Q1 2008
0.94
Q2 2008
0.81
Q3 2008
0.75
Q4 2008
0.70

According to BizBuySell.com, the median revenues for its business-for-sale listings was $448,350 in Q4 2008.

Cash Flow Multiples In Fresno, CA

Another useful technique to value a business is through cash flow multiples.

For Q4 2008, the average cash flow multiple for listed businesses in the Fresno, CA metro area was 3.36.

So, a company with cash flows of $120,000 might have an asking price of $403,150. 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 Fresno area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.32
Q2 2007
3.78
Q3 2007
3.52
Q4 2007
3.75
Q1 2008
4.03
Q2 2008
3.62
Q3 2008
3.39
Q4 2008
3.36

If you are interested in what cash flows are for a business in Fresno, BizBuySell.com reports that the median cash flow for Fresno area businesses was $114,402 in Q4 2008.

Things to Consider When Buying a Business in Fresno, CA

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 Fresno, CA 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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