Buying a Business
Cost to Buy a Business in Newport News
If you want to buy a business in Newport News, Virginia, you're no doubt wondering how much a typical Newport News, Virginia business costs to buy.
The good news is a company called BizBuySell.com has made some data available on what it costs to buy a business in Newport News.
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. In addition, many business owners who are selling on their own, without a broker, will place listings on BizBuySell.com.
If you want to buy a company in Virginia, check out the BizBuySell Virginia listings to get instant access to business-for-sale listings for Newport News and other Virginia towns.
Business Valuations in Newport News, VA
According to BizBuySell.com, the median asking price for an Newport News business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $258,750.
That was based on 220 listings in the Virginia Beach-Norfolk-Newport News, VA-NC metro area. As such, some of the businesses used to derive the median valuation might be outside of Newport News, but they are in the area and so are likely representative of Newport News business valuations.
Remember 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 Newport News business for much less. The flip side is that some Newport News businesses may cost much more.
Another thing you should know is that this is the asking price for an Newport News business. Typically, when a business owner lists a company 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. As an example, a company listed for $275,000 might sell for between $233,750 and $247,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Virginia Beach-Norfolk-Newport News, VA-NC metro area for the last 8 quarters.
Revenue Multiples In Newport News, VA
In the Virginia Beach-Norfolk-Newport News, VA-NC metro area, companies will typically sell for 0.76 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 $152,564. Remember, however, that this is just an average for revenue multiples in the area. Some companies will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are moving in the Newport News area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $402,500 in Q4 2008.
Cash Flow Multiples In Newport News, VA
Another common method to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the Virginia Beach-Norfolk-Newport News, VA-NC metro area was 3.20.
So, a business with cash flows of $120,000 might have an asking price of $384,025. That math only works if the business sells for the area's average multiple. Actual cash flow multiples are based on business specifics.
Here is how cash flow multiples are trending in the Newport News area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Newport News, BizBuySell.com reports that the median cash flow for Newport News area businesses was $100,000 in Q4 2008.
Things to Consider When Buying a Business in Newport News, VA
Bidding too little for a company is a bad strategy. Lowball bids are very rarely accepted. By making too low of a bid for a business, you risk offending the seller and ruining your chances of completing a deal. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Newport News, VA 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 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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