Buying a Business
Cost to Buy a Business in Louisville
If you want to buy a business in Louisville, Kentucky, you're no doubt wondering how much a typical Louisville, Kentucky business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what it costs to buy a business in Louisville.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. Their listings include almost all of the available listings from business brokers nationwide. They also have many FSBO (for sale by owner) business-for-sale listings.
If you are looking to buy a business in Kentucky, take a look at the BizBuySell Kentucky listings to see the latest business-for-sale listings for Louisville and other Kentucky cities.
Business Valuations in Louisville, KY
According to BizBuySell.com, the median asking price for an Louisville business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $225,000.
That was based on 73 listings in the Louisville-Jefferson County, KY-IN metro area. As such, some of the businesses used to derive the median valuation might be outside of Louisville, but they are nearby and so are likely representative of Louisville 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 Louisville business for much less. Having said that, some Louisville businesses may cost much more.
Importantly, this is the asking price for an Louisville 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 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 Louisville-Jefferson County, KY-IN metro area for the last 8 quarters.
Revenue Multiples In Louisville, KY
In the Louisville-Jefferson County, KY-IN metro area, companies will typically sell for 0.83 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q4 2008 in this metro area.
In other words, a business that has revenues of $200,000 might list for $166,911. Remember, however, that this is simply an average for revenue multiples in Louisville and surrounding communities. Some companies will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are tracking in the Louisville area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $400,000 in Q4 2008.
Cash Flow Multiples In Louisville, KY
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 Louisville-Jefferson County, KY-IN metro area was 3.97.
So, a business with cash flows of $120,000 might have an asking price of $476,256. That's if the business fits the area average. Actual cash flow multiples are based on business specifics.
The table below shows how cash flow multiples are trending in the Louisville area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Louisville, BizBuySell.com reports that the median cash flow for Louisville area businesses was $75,000 in Q4 2008.
Tips for Louisville, KY Business Buyers
Sellers want to be sure their business will continue to be successful. They want to find a buyer who has experience and will take care of the company's employees. As such, you are selling yourself to the current business owner and the professional team that represents the seller. You may think you are buying, but you also need to be selling. This useful tip for buying a business was provided by Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Louisville, KY Businesses
If you have a specific business in mind and want to value the business, 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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