Buying a Business
Cost to Buy a Business in Hoover
Considering purchasing a company in Hoover, Alabama? Your first question will probably be "How much does it cost to buy a business in Hoover?"
Fortunately, a company called BizBuySell.com has made some data available on what businesses are going for in Hoover.
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 Alabama, check out the BizBuySell Alabama listings to to be on the inside track with the newest business-for-sale listings for Hoover and other Alabama towns.
Business Valuations in Hoover, AL
According to BizBuySell.com, the median asking price for an Hoover business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $332,000.
That was based on 86 listings in the Birmingham-Hoover, AL metro area. As such, some of the businesses used to derive the median valuation might be outside of Hoover, but they are in the area and so are probably representative of Hoover 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 Hoover business for much less. The flip side is that some Hoover businesses may cost much more.
Another thing you should know is that this is the asking price for an Hoover business. Typically, when an entrepreneur lists a business for sale, they start with an asking price that is higher than the ultimate 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 Birmingham-Hoover, AL metro area for the last 8 quarters.
Revenue Multiples In Hoover, AL
In the Birmingham-Hoover, AL metro area, businesses will typically sell for 0.89 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 business that has revenues of $200,000 might list for $177,978. Remember, however, that this is strictly an average for revenue multiples in Hoover and surrounding communities. Some businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Hoover area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $528,500 in Q4 2008.
Cash Flow Multiples In Hoover, AL
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 Birmingham-Hoover, AL metro area was 3.75.
So, a business with cash flows of $120,000 might have an asking price of $450,334. 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 Hoover area, based on BizBuySell.com's quarterly reports.
Flow Multiple
In case you were wondering what typical cash flows are for a business in Hoover, BizBuySell.com determined that the median cash flow for Hoover area businesses was $107,510 in Q4 2008.
Things to Consider When Buying a Business in Hoover, AL
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 Hoover, AL 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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