Buying a Business
Cost to Buy a Business in Oakland
If you want to buy a business in Oakland, California, you'd do well to learn a little bit about trends in Oakland, California business valuations.
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Oakland.
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 California, check out the BizBuySell California listings to see the latest business-for-sale listings for Oakland and other California towns.
Oakland, CA Business Valuations
Based on the BizBuySell.com data, the median asking price for an Oakland business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 333 listings in the San Francisco-Oakland-Fremont, CA metro area. Many of the businesses in the dataset are outside of Oakland, but they are in the area and so are probably representative of Oakland 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 Oakland business for much less. The flip side is that some Oakland businesses may cost much more.
Importantly, this is the asking price for an Oakland business. Typically, when a business owner lists a business for sale, they start with an asking price that is higher than the contracted sale price. The sale-price-to-asking-price ratio varies considerably 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 San Francisco-Oakland-Fremont, CA metro area for the last 8 quarters.
Revenue Multiples In Oakland, CA
In the San Francisco-Oakland-Fremont, CA metro area, small businesses will typically sell for 0.69 times the selling company's revenues. This was 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 $138,562. Remember, however, 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 Oakland area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $444,500 in Q4 2008.
Cash Flow Multiples In Oakland, CA
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 San Francisco-Oakland-Fremont, CA metro area was 3.13.
So, a business with cash flows of $120,000 might have an asking price of $375,835. That math only works if the business sells for the area's average multiple. Most businesses will not conform to industry- or area averages.
Here is how cash flow multiples are trending in the Oakland area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Oakland, BizBuySell.com found that the median cash flow for Oakland area businesses was $104,000 in Q4 2008.
Things to Consider When Buying a Business in Oakland, CA
If you are interested in buying an existing business, you want the business broker you are working with to be selling you to the seller. As such, it's important that you demonstrate that you're a qualified, motivated buyer. Being prepared and serious about your search is an important initial step. This advice comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Oakland, CA 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 additional information.
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