Buying a Business
Cost to Buy a Business in Baltimore
Planning on buying a Baltimore, Maryland business? You're no doubt wondering how much a typical Baltimore, Maryland business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Baltimore.
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. They also have many FSBO (for sale by owner) business-for-sale listings.
If you are looking to buy a business in Maryland, check out the BizBuySell Maryland listings to get instant access to business-for-sale listings for Baltimore and other Maryland municipalities.
Business Valuations in Baltimore, MD
According to BizBuySell.com, the median asking price for an Baltimore business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $225,000.
That was based on 296 listings in the Baltimore-Towson, MD metro area. Many of the businesses in the dataset are outside of Baltimore, but they are nearby and so are likely representative of Baltimore 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 Baltimore business for much less. At the same time, some Baltimore businesses may cost much more.
Another thing you should know is that this is the asking price for an Baltimore business. Typically, when an entrepreneur lists a company for sale, they start with an asking price that is higher than the eventual sale price. The sale-price-to-asking-price ratios depend on deal specifics 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 for sale in the Baltimore-Towson, MD metro area for the last 8 quarters.
Baltimore, MD Revenue Multiples
In the Baltimore-Towson, MD metro area, businesses will typically sell for 0.75 times the selling company's revenues. This 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 $150,276. 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 Baltimore area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $404,496 in Q4 2008.
Cash Flow Multiples In Baltimore, MD
Another useful technique to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the Baltimore-Towson, MD metro area was 3.08.
So, a company with cash flows of $120,000 might have an asking price of $369,937. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the Baltimore area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Baltimore, BizBuySell.com reports that the median cash flow for Baltimore area businesses was $90,000 in Q4 2008.
Things to Consider When Buying a Business in Baltimore, MD
If you are looking to buy a business, be sure to contact business intermediaries who represent selling businesses within your targeted market. They will notify you of available companies that meet your criteria and qualifications. Most business brokers or intermediaries work for the seller and are paid by the seller. That means you can enjoy the luxury of their services at no cost. This helpful advice was provided by Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Baltimore, MD Businesses
If you have a specific business in mind and want to find out how much a business is worth, 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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