Buying a Business

Cost to Buy a Business in San Diego

If you want to buy a business in San Diego, California, you're no doubt wondering how much a typical San Diego, California business costs to buy.

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

BizBuySell.com is the Internet's largest and most heavily trafficked business for sale marketplace. 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 want to buy a company in California, peruse the BizBuySell California listings to to be on the inside track with the newest business-for-sale listings for San Diego and other California towns.

San Diego, CA Business Valuations

According to BizBuySell.com, the median asking price for an San Diego business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $199,750.

That was based on 388 listings in the San Diego-Carlsbad-San Marcos, CA metro area. Many of the businesses in the dataset are outside of San Diego, but they are in the area and so are probably representative of San Diego 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 San Diego business for much less. At the same time, some San Diego businesses may cost much more.

Importantly, this is the asking price for an San Diego business. Typically, when a business owner lists a company 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 San Diego-Carlsbad-San Marcos, CA metro area for the last 8 quarters.

Quarter
Median Ask
Q1 2007
$200,000
Q2 2007
$195,000
Q3 2007
$195,000
Q4 2007
$195,000
Q1 2008
$220,000
Q2 2008
$239,550
Q3 2008
$220,000
Q4 2008
$199,750

Revenue Multiples In San Diego, CA

In the San Diego-Carlsbad-San Marcos, CA metro area, businesses will usually sell for 0.69 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 $138,134. Remember, however, that this is simply 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 trending in the San Diego area, based on BizBuySell.com's quarterly reports.

Quarter
Revenue Multiple
Q1 2007
0.83
Q2 2007
0.73
Q3 2007
0.83
Q4 2007
0.76
Q1 2008
0.76
Q2 2008
0.78
Q3 2008
0.73
Q4 2008
0.69

According to BizBuySell.com, the median revenues for its business-for-sale listings was $355,000 in Q4 2008.

Cash Flow Multiples In San Diego, CA

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 San Diego-Carlsbad-San Marcos, CA metro area was 2.77.

So, a firm with cash flows of $120,000 might have an asking price of $332,023. 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 San Diego area, based on BizBuySell.com's quarterly reports.

Quarter
Median Cash
Flow Multiple
Q1 2007
3.14
Q2 2007
3.15
Q3 2007
3.35
Q4 2007
3.13
Q1 2008
3.08
Q2 2008
3.14
Q3 2008
2.94
Q4 2008
2.77

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

Tips for San Diego, CA Business Buyers

Before you start the process of buying a business, line up a team of professional advisors. Alert your attorney, accountant and financial advisors that you are looking for a business to buy. This good advice comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.

Business Valuations for San Diego, CA 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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