Buying a Business
Cost to Buy a Business in Indianapolis
If you want to buy a business in Indianapolis, Indiana, your first question will probably be "How much does it cost to buy a business in Indianapolis?"
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Indianapolis.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. The vast majority of business brokers in the country put their business listings on BizBuySell.com. They also have many FSBO (for sale by owner) business-for-sale listings.
If you want to buy a company in Indiana, check out the BizBuySell Indiana listings to see the latest business-for-sale listings for Indianapolis and other Indiana cities.
Indianapolis, IN Business Valuations
Based on the BizBuySell.com data, the median asking price for an Indianapolis business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $242,500.
That was based on 112 listings in the Indianapolis-Carmel, IN metro area. As such, some of the businesses used to derive the median valuation might be outside of Indianapolis, but they are close by and so are probably representative of Indianapolis 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 Indianapolis business for much less. The flip side is that some Indianapolis businesses may cost much more.
Another thing you should know is that this is the asking price for an Indianapolis business. Typically, when an entrepreneur lists a business for sale, they start with an asking price that is higher than the ultimate 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 in the Indianapolis-Carmel, IN metro area for the last 8 quarters.
Revenue Multiples In Indianapolis, IN
In the Indianapolis-Carmel, IN metro area, businesses will typically sell for 0.76 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this metro area.
In other words, a firm with revenues of $200,000 might list for $152,407. 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 Indianapolis area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $377,000 in Q4 2008.
Cash Flow Multiples In Indianapolis, IN
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 Indianapolis-Carmel, IN metro area was 3.02.
So, a company with cash flows of $120,000 might have an asking price of $362,503. 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 Indianapolis area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Indianapolis, BizBuySell.com reports that the median cash flow for Indianapolis area businesses was $90,528 in Q4 2008.
Tips for Indianapolis, IN Business Buyers
If you are interested in buying an existing business, you want the business broker you are working with to be selling you to the seller. As such, it's important that you demonstrate that you're a qualified, motivated buyer. Being prepared and serious about your search is an important initial step. This advice comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Indianapolis, IN 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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