Buying a Business
Cost to Buy a Business in Northern New Jersey
Considering purchasing a company in Northern New Jersey, New Jersey? You're no doubt wondering how much a typical Northern New Jersey, New Jersey business costs to buy.
The good news is the folks at BizBuySell.com have made some data available on what it costs to buy a business in Northern New Jersey.
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 New Jersey, check out the BizBuySell New Jersey listings to to be on the inside track with the newest business-for-sale listings for Northern New Jersey and other New Jersey towns.
Business Valuations in Northern New Jersey, NJ
According to BizBuySell.com, the median asking price for an Northern New Jersey business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 5144 listings in the New York-Northern New Jersey-Long Island, NY-NJ-PA metro area. Many of the businesses in the dataset are outside of Northern New Jersey, but they are in the area and so are likely representative of Northern New Jersey 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 Northern New Jersey business for much less. At the same time, some Northern New Jersey businesses may cost much more.
Importantly, this is the asking price for an Northern New Jersey business. Typically, when a business 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 ratio varies considerably 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 in the New York-Northern New Jersey-Long Island, NY-NJ-PA metro area for the last 8 quarters.
Northern New Jersey, NJ Revenue Multiples
In the New York-Northern New Jersey-Long Island, NY-NJ-PA metro area, businesses will usually sell for 0.83 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 $165,072. Remember, however, that this is in fact an average for revenue multiples in Northern New Jersey and surrounding communities. Some small businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Northern New Jersey area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $445,000 in Q4 2008.
Cash Flow Multiples In Northern New Jersey, NJ
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 New York-Northern New Jersey-Long Island, NY-NJ-PA metro area was 2.91.
So, a business with cash flows of $120,000 might have an asking price of $348,662. That's if the business fits the area average. Cash flow multiples can vary considerably based on many factors.
The table below shows how cash flow multiples are trending in the Northern New Jersey area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Northern New Jersey, BizBuySell.com determined that the median cash flow for Northern New Jersey area businesses was $120,000 in Q4 2008.
Things to Consider When Buying a Business in Northern New Jersey, NJ
If you are interested in buying an existing business, you want the business broker you are working with to be selling you to the seller. As such, it's important that you demonstrate that you're a qualified, motivated buyer. Being prepared and serious about your search is an important initial step. This advice comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Northern New Jersey, NJ 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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