Buying a Business
Cost to Buy a Business in St. Louis
If you want to buy a business in St. Louis, Missouri, your first question will probably be "How much does it cost to buy a business in St. Louis?"
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in St. Louis.
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 Missouri, check out the BizBuySell Missouri listings to get instant access to business-for-sale listings for St. Louis and other Missouri towns.
Business Valuations in St. Louis, MO
According to BizBuySell.com, the median asking price for an St. Louis business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $278,500.
That was based on 194 listings in the St. Louis, MO-IL metro area. As such, some of the businesses used to derive the median valuation might be outside of St. Louis, but they are nearby and so are likely representative of St. Louis 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 St. Louis business for much less. At the same time, some St. Louis businesses may cost much more.
Another thing you should know is that this is the asking price for an St. Louis business. Typically, when an owner lists a company for sale, they start with an asking price that is higher than the final 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 companies in the St. Louis, MO-IL metro area for the last 8 quarters.
Revenue Multiples In St. Louis, MO
In the St. Louis, MO-IL metro area, businesses will typically sell for 0.87 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 business that has revenues of $200,000 might list for $174,880. 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 moving in the St. Louis area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $449,777 in Q4 2008.
Cash Flow Multiples In St. Louis, MO
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 St. Louis, MO-IL metro area was 4.19.
So, a business with cash flows of $120,000 might have an asking price of $502,680. That math only works if the business sells for the area's average multiple. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the St. Louis area, based on BizBuySell.com's quarterly reports.
In case you were wondering what typical cash flows are for a business in St. Louis, BizBuySell.com determined that the median cash flow for St. Louis area businesses was $79,860 in Q4 2008.
Things to Consider When Buying a Business in St. Louis, MO
Sellers want to be sure their business will continue to be successful. They want to find a buyer who has experience and will take care of the company's employees. As such, you are selling yourself to the current business owner and the professional team that represents the seller. You may think you are buying, but you also need to be selling. This useful tip for buying a business was provided by Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for St. Louis, MO 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 additional information.
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