Buying a Business
Cost to Buy a Business in Scottsdale
Considering purchasing a company in Scottsdale, Arizona? You're no doubt wondering how much a typical Scottsdale, Arizona business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Scottsdale.
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 Arizona, check out the BizBuySell Arizona listings to get instant access to business-for-sale listings for Scottsdale and other Arizona towns.
Scottsdale, AZ Business Valuations
According to BizBuySell.com, the median asking price for an Scottsdale business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $200,000.
That was based on 1468 listings in the Phoenix-Mesa-Scottsdale, AZ metro area. Many of the businesses in the dataset are outside of Scottsdale, but they are in the area and so are likely representative of Scottsdale 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 Scottsdale business for much less. At the same time, some Scottsdale businesses may cost much more.
Another thing you should know is that this is the asking price for an Scottsdale business. Typically, when a business owner 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 ratios depend on deal specifics but typically might be between 0.85 and 0.90. In other words, a business listed for $100,000 might sell for between $85,000 and $90,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses for sale in the Phoenix-Mesa-Scottsdale, AZ metro area for the last 8 quarters.
Scottsdale, AZ Revenue Multiples
In the Phoenix-Mesa-Scottsdale, AZ metro area, businesses will typically sell for 0.88 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 business that has revenues of $200,000 might list for $176,226. 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 Scottsdale area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $330,960 in Q4 2008.
Cash Flow Multiples In Scottsdale, AZ
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 Phoenix-Mesa-Scottsdale, AZ metro area was 3.19.
So, a company with cash flows of $120,000 might have an asking price of $383,176. 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 Scottsdale area, based on BizBuySell.com's quarterly reports.
Flow Multiple
In case you were wondering what typical cash flows are for a business in Scottsdale, BizBuySell.com reports that the median cash flow for Scottsdale area businesses was $80,946 in Q4 2008.
Tips for Scottsdale, AZ Business Buyers
If you are looking to buy a business, be sure to contact business intermediaries who represent selling businesses within your targeted market. They will notify you of available companies that meet your criteria and qualifications. Most business brokers or intermediaries work for the seller and are paid by the seller. That means you can enjoy the luxury of their services at no cost. This helpful advice was provided by Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Scottsdale, AZ 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 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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