Buying a Business

Cost to Buy a Business in Raleigh

If you want to buy a business in Raleigh, North Carolina, you're no doubt wondering how much a typical Raleigh, North Carolina business costs to buy.

Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Raleigh.

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 North Carolina, check out the BizBuySell North Carolina listings to see the latest business-for-sale listings for Raleigh and other North Carolina towns.

Business Valuations in Raleigh, NC

According to BizBuySell.com, the median asking price for an Raleigh business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $248,500.

That was based on 164 listings in the Raleigh-Cary, NC metro area. Many of the businesses in the dataset are outside of Raleigh, but they are close by and so are probably representative of Raleigh 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 Raleigh business for much less. At the same time, some Raleigh businesses may cost much more.

Importantly, this is the asking price for an Raleigh business. Typically, when a business owner lists a business for sale, they start with an asking price that is higher than the ultimate 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 Raleigh-Cary, NC metro area for the last 8 quarters.

Quarter
Median Ask
Q1 2007
$195,000
Q2 2007
$197,500
Q3 2007
$225,000
Q4 2007
$240,000
Q1 2008
$250,000
Q2 2008
$241,500
Q3 2008
$245,000
Q4 2008
$248,500

Revenue Multiples In Raleigh, NC

In the Raleigh-Cary, NC metro area, businesses will typically sell for 0.76 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 $151,772. Remember, however, that this is just an average for revenue multiples in the area. Some entities will have higher revenue multiples and others will have lower revenue multiples.

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

Quarter
Revenue Multiple
Q1 2007
0.66
Q2 2007
0.80
Q3 2007
0.76
Q4 2007
0.79
Q1 2008
0.77
Q2 2008
0.74
Q3 2008
0.73
Q4 2008
0.76

According to BizBuySell.com, the median revenues for its business-for-sale listings was $400,000 in Q4 2008.

Cash Flow Multiples In Raleigh, NC

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 Raleigh-Cary, NC metro area was 3.16.

So, a business with cash flows of $120,000 might have an asking price of $379,693. 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 Raleigh area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.21
Q2 2007
3.27
Q3 2007
3.02
Q4 2007
3.20
Q1 2008
3.37
Q2 2008
3.28
Q3 2008
3.14
Q4 2008
3.16

In case you were wondering what typical cash flows are for a business in Raleigh, BizBuySell.com found that the median cash flow for Raleigh area businesses was $90,183 in Q4 2008.

Things to Consider When Buying a Business in Raleigh, NC

When buying a business, it's often a good idea to have the previous owner stay on for a transition period after you buy the business. This can range from a couple of weeks to several months. The goal is to make sure you are well-trained on how to run the business and that you minimize any revenue or customer attrition. Most sellers are willing to do this. After all, they want to see their company continue to do well even after they are no longer involved in the business. This advice on how to structure a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.

Business Valuations for Raleigh, NC 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 more information.

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