Buying a Business
Cost to Buy a Business in Arlington
Considering purchasing a company in Arlington, Texas? You're no doubt wondering how much a typical Arlington, Texas business costs to buy.
Luckily, a company called BizBuySell.com has made some data available on what it costs to buy a business in Arlington.
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 want to buy a company in Texas, check out the BizBuySell Texas listings to see the latest business-for-sale listings for Arlington and other Texas towns.
Business Valuations in Arlington, TX
According to BizBuySell.com, the median asking price for an Arlington business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $290,000.
That was based on 923 listings in the Dallas-Fort Worth-Arlington, TX metro area. As such, some of the businesses used to derive the median valuation might be outside of Arlington, but they are nearby and so are probably representative of Arlington 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 Arlington business for much less. The flip side is that some Arlington businesses may cost much more.
Importantly, this is the asking price for an Arlington business. Typically, when a business owner lists a company for sale, they start with an asking price that is higher than the contracted sale price. The sale-price-to-asking-price ratio varies considerably but typically might be between 0.85 and 0.90. That is to say, if an owner lists a business for $150,000, it might sell for between $127,500 and $135,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Dallas-Fort Worth-Arlington, TX metro area for the last 8 quarters.
Arlington, TX Revenue Multiples
In the Dallas-Fort Worth-Arlington, TX metro area, businesses will typically sell for 0.96 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 $192,320. Remember, however, that this is just an average for revenue multiples in the area. Some small businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are changing in the Arlington area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $450,000 in Q4 2008.
Cash Flow Multiples In Arlington, TX
Another common method to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the Dallas-Fort Worth-Arlington, TX metro area was 3.53.
So, a firm with cash flows of $120,000 might have an asking price of $424,089. 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 Arlington area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Arlington, BizBuySell.com determined that the median cash flow for Arlington area businesses was $111,564 in Q4 2008.
Things to Consider When Buying a Business in Arlington, TX
Never underestimate what it will take to be a successful entrepreneur. It's important to understand that owners work long hours, and, in many casees, it can take a while before a business generates sufficient cash flow to pay the owner well. This useful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Arlington, TX 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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