Buying a Business
Cost to Buy a Business in Warren
Considering purchasing a company in Warren, Michigan? You're no doubt wondering how much a typical Warren, Michigan 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 Warren.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. 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 are looking to buy a business in Michigan, check out the BizBuySell Michigan listings to to be on the inside track with the newest business-for-sale listings for Warren and other Michigan towns.
Warren, MI Business Valuations
According to BizBuySell.com, the median asking price for an Warren business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $231,000.
That was based on 174 listings in the Detroit-Warren-Livonia, MI metro area. As such, some of the businesses used to derive the median valuation might be outside of Warren, but they are in the area and so are probably representative of Warren 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 Warren business for much less. Having said that, some Warren businesses may cost much more.
Another thing you should know is that this is the asking price for an Warren 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. 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 Detroit-Warren-Livonia, MI metro area for the last 8 quarters.
Revenue Multiples In Warren, MI
In the Detroit-Warren-Livonia, MI 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 metro area.
In other words, a business that has revenues of $200,000 might list for $182,995. Remember, however, that this is just 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 tracking in the Warren area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $349,000 in Q4 2008.
Cash Flow Multiples In Warren, MI
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 Detroit-Warren-Livonia, MI metro area was 3.48.
So, a company with cash flows of $120,000 might have an asking price of $418,003. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
Here is how cash flow multiples are trending in the Warren area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Warren, BizBuySell.com reports that the median cash flow for Warren area businesses was $82,264 in Q4 2008.
Things to Consider When Buying a Business in Warren, MI
Be sure to assess your financial situation. Be sure to carefully consider how much money you need and how much you want to earn. Your expectations need to be realistic and they must be something that can be achieved by the type of business you are searching for. This excellent business buying tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Warren, MI Businesses
If you have a specific business in mind and want to value the business, 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 additional information.
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