Buying a Business
Cost to Buy a Business in Riverside
Considering purchasing a company in Riverside, California? You're no doubt wondering how much a typical Riverside, California business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Riverside.
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, peruse the BizBuySell California listings to see the latest business-for-sale listings for Riverside and other California cities.
Business Valuations in Riverside, CA
Based on the BizBuySell.com data, the median asking price for an Riverside business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 633 listings in the Riverside-San Bernardino-Ontario, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Riverside, but they are in the area and so are likely representative of Riverside 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 Riverside business for much less. At the same time, some Riverside businesses may cost much more.
Importantly, this is the asking price for an Riverside 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. This suggests that a business listed for $325,000 might be purchased for between $276,250 and $292,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Riverside-San Bernardino-Ontario, CA metro area for the last 8 quarters.
Revenue Multiples In Riverside, CA
In the Riverside-San Bernardino-Ontario, CA metro area, small businesses will usually sell for 0.82 times the selling company's revenues. The data indicates that is the mean revenue multiple for Q4 2008 in this part of the country.
In other words, a business that has revenues of $200,000 might list for $164,567. Keep in mind 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 Riverside area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $439,766 in Q4 2008.
Cash Flow Multiples In Riverside, 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 Riverside-San Bernardino-Ontario, CA metro area was 3.12.
So, a company with cash flows of $120,000 might have an asking price of $374,571. That's if the business fits the area average. Cash flow multiples can vary considerably based on many factors.
The table below shows how cash flow multiples are trending in the Riverside area, based on BizBuySell.com's quarterly reports.
In case you were wondering what typical cash flows are for a business in Riverside, BizBuySell.com reports that the median cash flow for Riverside area businesses was $100,000 in Q4 2008.
Things to Consider When Buying a Business in Riverside, CA
When buying a business, it's often a good idea to have the previous owner stay on for a transition period after you buy the business. This can range from a couple of weeks to several months. The goal is to make sure you are well-trained on how to run the business and that you minimize any revenue or customer attrition. Most sellers are willing to do this. After all, they want to see their company continue to do well even after they are no longer involved in the business. This advice on how to structure a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Riverside, 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 additional information.
Share this article
Additional Resources for Entrepreneurs