Buying a Business
Cost to Buy a Business in Orange County
Planning on buying a Orange County, California business? You'd do well to learn a little bit about trends in Orange County, California business valuations.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Orange County.
BizBuySell.com is the Internet's largest and most heavily trafficked business for sale marketplace. 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 Orange County and other California towns.
Business Valuations in Orange County, CA
According to BizBuySell.com, the median asking price for an Orange County business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $220,000.
That was based on 1016 listings in the Orange County, CA metro area. Many of the businesses in the dataset are outside of Orange County, but they are in the area and so are probably representative of Orange County 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 Orange County business for much less. The flip side is that some Orange County businesses may cost much more.
Another thing you should know is that this is the asking price for an Orange County business. Typically, when an entrepreneur 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 ratio varies considerably but typically might be between 0.85 and 0.90. As such, a business listed for $175,000 might sell for between $148,750 and $157,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Orange County, CA metro area for the last 8 quarters.
Orange County, CA Revenue Multiples
In the Orange County, CA metro area, businesses will typically sell for 0.76 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 $151,442. Keep in mind that this is only an average for revenue multiples in the area. Some small businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Orange County area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $360,000 in Q4 2008.
Cash Flow Multiples In Orange County, 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 Orange County, CA metro area was 2.97.
So, a business with cash flows of $120,000 might have an asking price of $356,819. 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 Orange County area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Orange County, BizBuySell.com reports that the median cash flow for Orange County area businesses was $85,324 in Q4 2008.
Tips for Orange County, CA Business Buyers
Credit is tight in this economy. Given that banks may be unwilling lend you money for the purchase of a business, you may want to look for seller financing. When a seller gives you financing, it shows they have confidence in the business, as well as confidence in your being able to run the business well enough to pay off the seller note. This advice on financing a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Orange County, CA 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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