Buying a Business
Cost to Buy a Business in Livonia
Planning on buying a Livonia, Michigan business? You'd do well to learn a little bit about trends in Livonia, Michigan business valuations.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Livonia.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. Their listings include almost all of the available listings from business brokers nationwide. 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 Michigan, peruse the BizBuySell Michigan listings to see the latest business-for-sale listings for Livonia and other Michigan towns.
Business Valuations in Livonia, MI
According to BizBuySell.com, the median asking price for an Livonia business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $231,000.
That was based on 174 listings in the Detroit-Warren-Livonia, MI metro area. As such, some of the businesses used to derive the median valuation might be outside of Livonia, but they are close by and so are probably representative of Livonia 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 Livonia business for much less. At the same time, some Livonia businesses may cost much more.
Another thing you should know is that this is the asking price for an Livonia business. Typically, when a company owner lists a business for sale, they start with an asking price that is higher than the final 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 businesses in the Detroit-Warren-Livonia, MI metro area for the last 8 quarters.
Revenue Multiples In Livonia, MI
In the Detroit-Warren-Livonia, MI metro area, businesses will usually sell for 0.91 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 $182,995. Remember, however, that this is strictly an average for revenue multiples in the area. Some small businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Livonia area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $349,000 in Q4 2008.
Cash Flow Multiples In Livonia, MI
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 Detroit-Warren-Livonia, MI metro area was 3.48.
So, a company with cash flows of $120,000 might have an asking price of $418,003. That math only works if the business sells for the area's average multiple. Actual cash flow multiples can vary considerably from one business to another.
The table below shows how cash flow multiples are trending in the Livonia area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Livonia, BizBuySell.com reports that the median cash flow for Livonia area businesses was $82,264 in Q4 2008.
Things to Consider When Buying a Business in Livonia, MI
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 Livonia, MI 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 additional information.
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