Buying a Business
Cost to Buy a Business in Denver
Considering purchasing a company in Denver, Colorado? You've come to the right place to get statistics and trend data on Denver, Colorado business-for-sale transactions.
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Denver.
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 are looking to buy a business in Colorado, take a look at the BizBuySell Colorado listings to see the latest business-for-sale listings for Denver and other Colorado towns.
Business Valuations in Denver, CO
According to BizBuySell.com, the median asking price for an Denver business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 352 listings in the Denver-Aurora, CO metro area. Many of the businesses in the dataset are outside of Denver, but they are in the area and so are probably representative of Denver 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 Denver business for much less. At the same time, some Denver businesses may cost much more.
Another thing you should know is that this is the asking price for an Denver business. Typically, when an 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 ratios depend on deal specifics 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 for sale in the Denver-Aurora, CO metro area for the last 8 quarters.
Revenue Multiples In Denver, CO
In the Denver-Aurora, CO metro area, companies will usually sell for 0.79 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 $158,077. Keep in mind that this is strictly 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 Denver area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $426,000 in Q4 2008.
Cash Flow Multiples In Denver, CO
Another useful technique to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for businesses listed in the Denver-Aurora, CO metro area was 3.17.
So, a company with cash flows of $120,000 might have an asking price of $380,001. 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 Denver area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Denver, BizBuySell.com found that the median cash flow for Denver area businesses was $93,628 in Q4 2008.
Things to Consider When Buying a Business in Denver, CO
When buying a business, always start with a self assessment. Ask yourself why you want to buy a business. What types of work activities do you like and what kind of lifestyle do you want to pursue? Be sure to include your family in the assessment. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Denver, CO 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 additional information.
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