Buying a Business
Cost to Buy a Business in Dallas
If you want to buy a business in Dallas, Texas, you'd do well to learn a little bit about trends in Dallas, Texas business valuations.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Dallas.
BizBuySell.com is the biggest business-for-sale listings site on the Internet, offering over 50,000 businesses for sale at any given time. The vast majority of business brokers in the country put their business listings 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 are looking to buy a business in Texas, check out the BizBuySell Texas listings to see the latest business-for-sale listings for Dallas and other Texas municipalities.
Business Valuations in Dallas, TX
According to BizBuySell.com, the median asking price for an Dallas 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 Dallas, but they are in the area and so are probably representative of Dallas 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 Dallas business for much less. The flip side is that some Dallas businesses may cost much more.
Another thing you should know is that this is the asking price for an Dallas business. Typically, when a company owner 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 ratio varies considerably but typically might be between 0.85 and 0.90. This suggests that a business listed for $325,000 might be purchased for between $276,250 and $292,500.
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.
Revenue Multiples In Dallas, TX
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 firm with revenues of $200,000 might list for $192,320. Remember, however, that this is simply 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 Dallas area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $450,000 in Q4 2008.
Cash Flow Multiples In Dallas, 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 business with cash flows of $120,000 might have an asking price of $424,089. That math only works if the business sells for the area's average multiple. Actual cash flow multiples are based on business specifics.
The table below shows how cash flow multiples are trending in the Dallas area, based on BizBuySell.com's quarterly reports.
Flow Multiple
In case you were wondering what typical cash flows are for a business in Dallas, BizBuySell.com reports that the median cash flow for Dallas area businesses was $111,564 in Q4 2008.
Tips for Dallas, TX Business Buyers
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 Dallas, 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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