Buying a Business
Cost to Buy a Business in Salt Lake City
Considering purchasing a company in Salt Lake City, Utah? You're no doubt wondering how much a typical Salt Lake City, Utah business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what businesses are going for in Salt Lake City.
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 Utah, check out the BizBuySell Utah listings to get instant access to business-for-sale listings for Salt Lake City and other Utah towns.
Business Valuations in Salt Lake City, UT
Based on the BizBuySell.com data, the median asking price for an Salt Lake City business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $325,000.
That was based on 223 listings in the Salt Lake City, UT metro area. As such, some of the businesses used to derive the median valuation might be outside of Salt Lake City, but they are in the area and so are probably representative of Salt Lake City 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 Salt Lake City business for much less. Having said that, some Salt Lake City businesses may cost much more.
Another thing you should know is that this is the asking price for an Salt Lake City business. Typically, when a company 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 Salt Lake City, UT metro area for the last 8 quarters.
Revenue Multiples In Salt Lake City, UT
In the Salt Lake City, UT metro area, businesses will typically sell for 0.99 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this area of the country.
In other words, a firm with revenues of $200,000 might list for $197,332. Remember, however, that this is in fact an average for revenue multiples in Salt Lake City and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are tracking in the Salt Lake City area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $439,572 in Q4 2008.
Cash Flow Multiples In Salt Lake City, UT
Another popular way to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for businesses listed in the Salt Lake City, UT metro area was 3.45.
So, a business with cash flows of $120,000 might have an asking price of $413,925. 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 Salt Lake City area, based on BizBuySell.com's quarterly reports.
If you are interested in what cash flows are for a business in Salt Lake City, BizBuySell.com reports that the median cash flow for Salt Lake City area businesses was $107,847 in Q4 2008.
Things to Consider When Buying a Business in Salt Lake City, UT
Never underestimate what it will take to be a successful entrepreneur. It's important to understand that owners work long hours, and, in many casees, it can take a while before a business generates sufficient cash flow to pay the owner well. This useful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Salt Lake City, UT 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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