Buying a Business

Cost to Buy a Business in St. Paul

Planning on buying a St. Paul, Minnesota business? You're no doubt wondering how much a typical St. Paul, Minnesota business costs to buy.

Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in St. Paul.

BizBuySell.com is the biggest business-for-sale listings site on the Internet, offering over 50,000 businesses for sale at any given time. Their listings include almost all of the available listings from business brokers nationwide. In addition, many business owners who are selling on their own, without a broker, will place listings on BizBuySell.com.

If you want to buy a company in Minnesota, take a look at the BizBuySell Minnesota listings to see the latest business-for-sale listings for St. Paul and other Minnesota towns.

St. Paul, MN Business Valuations

According to BizBuySell.com, the median asking price for an St. Paul business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $300,000.

That was based on 291 listings in the Minneapolis-St. Paul-Bloomington, MN-WI metro area. As such, some of the businesses used to derive the median valuation might be outside of St. Paul, but they are close by and so are likely representative of St. Paul 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 St. Paul business for much less. At the same time, some St. Paul businesses may cost much more.

Another thing you should know is that this is the asking price for an St. Paul business. Typically, when a company 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 companies in the Minneapolis-St. Paul-Bloomington, MN-WI metro area for the last 8 quarters.

Quarter
Median Ask
Q1 2007
$250,000
Q2 2007
$259,000
Q3 2007
$300,000
Q4 2007
$299,000
Q1 2008
$265,000
Q2 2008
$250,000
Q3 2008
$265,000
Q4 2008
$300,000

Revenue Multiples In St. Paul, MN

In the Minneapolis-St. Paul-Bloomington, MN-WI metro area, businesses will typically sell for 0.91 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 $181,979. Keep in mind that this is in fact an average for revenue multiples in St. Paul and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.

Here is how median revenue multiples are changing in the St. Paul area, based on BizBuySell.com's quarterly reports.

Quarter
Revenue Multiple
Q1 2007
0.76
Q2 2007
0.88
Q3 2007
0.83
Q4 2007
0.87
Q1 2008
0.85
Q2 2008
0.88
Q3 2008
0.91
Q4 2008
0.91

According to BizBuySell.com, the median revenues for its business-for-sale listings was $402,000 in Q4 2008.

Cash Flow Multiples In St. Paul, MN

Another useful technique to value a business is through cash flow multiples.

For Q4 2008, the average cash flow multiple for listed businesses in the Minneapolis-St. Paul-Bloomington, MN-WI metro area was 4.37.

So, a business with cash flows of $120,000 might have an asking price of $523,808. 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 St. Paul area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.93
Q2 2007
3.76
Q3 2007
3.91
Q4 2007
4.02
Q1 2008
3.99
Q2 2008
4.20
Q3 2008
4.19
Q4 2008
4.37

If you are interested in what cash flows are for a business in St. Paul, BizBuySell.com determined that the median cash flow for St. Paul area businesses was $85,000 in Q4 2008.

Tips for St. Paul, MN Business Buyers

Bidding too little for a company is a bad strategy. Lowball bids are very rarely accepted. By making too low of a bid for a business, you risk offending the seller and ruining your chances of completing a deal. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.

Business Valuations for St. Paul, MN 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.

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