Buying a Business
Cost to Buy a Business in Honolulu
Considering purchasing a company in Honolulu, Hawaii? You're no doubt wondering how much a typical Honolulu, Hawaii business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what it costs to buy a business in Honolulu.
BizBuySell.com is the Internet's largest and most heavily trafficked business for sale marketplace. 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 Hawaii, take a look at the BizBuySell Hawaii listings to to be on the inside track with the newest business-for-sale listings for Honolulu and other Hawaii towns.
Business Valuations in Honolulu, HI
According to BizBuySell.com, the median asking price for an Honolulu business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $398,000.
That was based on 27 listings in the Honolulu, HI metro area. As such, some of the businesses used to derive the median valuation might be outside of Honolulu, but they are in the area and so are likely representative of Honolulu 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 Honolulu business for much less. At the same time, some Honolulu businesses may cost much more.
Importantly, this is the asking price for an Honolulu 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 companies in the Honolulu, HI metro area for the last 8 quarters.
Revenue Multiples In Honolulu, HI
In the Honolulu, HI metro area, businesses will typically sell for 0.85 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 $170,748. Remember, however, that this is just an average for revenue multiples in Honolulu 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 Honolulu area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $526,037 in Q4 2008.
Cash Flow Multiples In Honolulu, HI
Another popular way to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for businesses listed in the Honolulu, HI metro area was 3.26.
So, a company with cash flows of $120,000 might have an asking price of $391,132. 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 Honolulu area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Honolulu, BizBuySell.com determined that the median cash flow for Honolulu area businesses was $150,400 in Q4 2008.
Things to Consider When Buying a Business in Honolulu, HI
When buying a business, it's often a good idea to have the previous owner stay on for a transition period after you buy the business. This can range from a couple of weeks to several months. The goal is to make sure you are well-trained on how to run the business and that you minimize any revenue or customer attrition. Most sellers are willing to do this. After all, they want to see their company continue to do well even after they are no longer involved in the business. This advice on how to structure a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Honolulu, HI 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 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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