Buying a Business
Cost to Buy a Business in New Orleans
Planning on buying a New Orleans, Louisiana business? You're no doubt wondering how much a typical New Orleans, Louisiana business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in New Orleans.
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. 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 Louisiana, check out the BizBuySell Louisiana listings to see the latest business-for-sale listings for New Orleans and other Louisiana towns.
Business Valuations in New Orleans, LA
According to BizBuySell.com, the median asking price for an New Orleans business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 64 listings in the New Orleans-Metairie-Kenner, LA metro area. As such, some of the businesses used to derive the median valuation might be outside of New Orleans, but they are in the area and so are probably representative of New Orleans 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 New Orleans business for much less. At the same time, some New Orleans businesses may cost much more.
Another thing you should know is that this is the asking price for an New Orleans business. Typically, when a company 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 ratios depend on deal specifics but typically might be between 0.85 and 0.90. Based on this rule of thumb, a business listed for $225,000 might sell for between $191,250 and $202,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the New Orleans-Metairie-Kenner, LA metro area for the last 8 quarters.
Revenue Multiples In New Orleans, LA
In the New Orleans-Metairie-Kenner, LA metro area, businesses will typically sell for 1.07 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this part of the country.
In other words, a firm with revenues of $200,000 might list for $213,766. Keep in mind that this is strictly 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 tracking in the New Orleans area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $345,510 in Q4 2008.
Cash Flow Multiples In New Orleans, LA
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 New Orleans-Metairie-Kenner, LA metro area was 3.71.
So, a business with cash flows of $120,000 might have an asking price of $445,078. 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 New Orleans area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in New Orleans, BizBuySell.com reports that the median cash flow for New Orleans area businesses was $94,644 in Q4 2008.
Things to Consider When Buying a Business in New Orleans, LA
It is important to keep in mind that no business is perfect. It is not unusual for buyers to find a few inconsistencies or anomalies in a business when they get to the due diligence stage. These should be questioned and understood. If the information turns out to be structural or material, then you may consider either canceling a deal or renegotiating a deal based on the new facts. However, be careful not to over-react and assume that any deviation is a deal-killer. Oftentimes, these differences can be explained and overcome with thoughtful communication between all the parties. This good business buying tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for New Orleans, LA Businesses
If you have a specific business in mind and want to find out how much a business is worth, 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 more information.
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