Buying a Business
Cost to Buy a Business in Columbus
Considering purchasing a company in Columbus, Ohio? You'd do well to learn a little bit about trends in Columbus, Ohio business valuations.
Fortunately, a company called BizBuySell.com has made some data available on what businesses are going for in Columbus.
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 want to buy a company in Ohio, peruse the BizBuySell Ohio listings to to be on the inside track with the newest business-for-sale listings for Columbus and other Ohio towns.
Columbus, OH Business Valuations
According to BizBuySell.com, the median asking price for an Columbus business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $174,500.
That was based on 77 listings in the Columbus, OH metro area. As such, some of the businesses used to derive the median valuation might be outside of Columbus, but they are in the area and so are probably representative of Columbus 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 Columbus business for much less. Having said that, some Columbus businesses may cost much more.
Another thing you should know is that this is the asking price for an Columbus business. Typically, when a business owner lists a business for sale, they start with an asking price that is higher than the eventual 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 companies in the Columbus, OH metro area for the last 8 quarters.
Columbus, OH Revenue Multiples
In the Columbus, OH metro area, small businesses will typically sell for 0.86 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 $172,264. Remember, however, that this is just an average for revenue multiples in the area. Some businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Columbus area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $354,363 in Q4 2008.
Cash Flow Multiples In Columbus, OH
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 Columbus, OH metro area was 3.54.
So, a business with cash flows of $120,000 might have an asking price of $424,518. 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 Columbus area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Columbus, BizBuySell.com reports that the median cash flow for Columbus area businesses was $66,572 in Q4 2008.
Tips for Columbus, OH 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 Columbus, OH 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 published on a quarterly basis. If you find this data interesting, be sure to visit BizBuySell.com Insights Report for more information.
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