Buying a Business
Cost to Buy a Business in Seattle
Considering purchasing a company in Seattle, Washington? You'd do well to learn a little bit about trends in Seattle, Washington business valuations.
Fortunately, the team at BizBuySell.com has made some data available on what businesses are going for in Seattle.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. Their listings include almost all of the available listings from business brokers nationwide. They also have many FSBO (for sale by owner) business-for-sale listings.
If you are looking to buy a business in Washington, take a look at the BizBuySell Washington listings to see the latest business-for-sale listings for Seattle and other Washington towns.
Seattle, WA Business Valuations
According to BizBuySell.com, the median asking price for an Seattle business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 321 listings in the Seattle-Tacoma-Bellevue, WA metro area. As such, some of the businesses used to derive the median valuation might be outside of Seattle, but they are in the area and so are probably representative of Seattle 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 Seattle business for much less. At the same time, some Seattle businesses may cost much more.
Another thing you should know is that this is the asking price for an Seattle business. Typically, when an owner lists a business 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. 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 Seattle-Tacoma-Bellevue, WA metro area for the last 8 quarters.
Revenue Multiples In Seattle, WA
In the Seattle-Tacoma-Bellevue, WA metro area, businesses will usually sell for 0.67 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 firm with revenues of $200,000 might list for $134,288. 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 trending in the Seattle area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $456,249 in Q4 2008.
Cash Flow Multiples In Seattle, WA
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 Seattle-Tacoma-Bellevue, WA metro area was 3.19.
So, a business with cash flows of $120,000 might have an asking price of $382,642. That math only works if the business sells for the area's average multiple. The distribution on revenue multiples for a given set of businesses can be quite wide-ranging.
The table below shows how cash flow multiples are trending in the Seattle area, based on BizBuySell.com's quarterly reports.
In case you were wondering what typical cash flows are for a business in Seattle, BizBuySell.com reports that the median cash flow for Seattle area businesses was $103,224 in Q4 2008.
Tips for Seattle, WA 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 Seattle, WA Businesses
If you have a specific business in mind and want to get a ballpark business valuation, 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 additional information.
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