Buying a Business
Cost to Buy a Business in Durham
Considering purchasing a company in Durham, North Carolina? Your first question will probably be "How much does it cost to buy a business in Durham?"
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Durham.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. When a business broker in a local city has a listing, the broker will typically post it 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 North Carolina, check out the BizBuySell North Carolina listings to see the latest business-for-sale listings for Durham and other North Carolina cities.
Business Valuations in Durham, NC
According to BizBuySell.com, the median asking price for an Durham business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $275,000.
That was based on 33 listings in the Durham, NC metro area. As such, some of the businesses used to derive the median valuation might be outside of Durham, but they are close by and so are probably representative of Durham 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 Durham business for much less. At the same time, some Durham businesses may cost much more.
Another thing you should know is that this is the asking price for an Durham business. Typically, when a company 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. So, a company listed for $125,000 would often sell for between $106,250 and $112,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Durham, NC metro area for the last 8 quarters.
Durham, NC Revenue Multiples
In the Durham, NC metro area, small businesses will typically sell for 1.14 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 $227,273. Remember, however, that this is in fact an average for revenue multiples in Durham and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Durham area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $375,118 in Q4 2008.
Cash Flow Multiples In Durham, NC
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 Durham, NC metro area was 4.24.
So, a business with cash flows of $120,000 might have an asking price of $508,697. 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 Durham area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Durham, BizBuySell.com reports that the median cash flow for Durham area businesses was $81,000 in Q4 2008.
Things to Consider When Buying a Business in Durham, NC
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 Durham, NC 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 more information.
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