Buying a Business
Cost to Buy a Business in Mesa
Considering purchasing a company in Mesa, Arizona? Your first question will probably be "How much does it cost to buy a business in Mesa?"
Luckily, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Mesa.
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 are looking to buy a business in Arizona, check out the BizBuySell Arizona listings to get instant access to business-for-sale listings for Mesa and other Arizona cities.
Business Valuations in Mesa, AZ
According to BizBuySell.com, the median asking price for an Mesa business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $200,000.
That was based on 1468 listings in the Phoenix-Mesa-Scottsdale, AZ metro area. Many of the businesses in the dataset are outside of Mesa, but they are in the area and so are probably representative of Mesa 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 Mesa business for much less. Having said that, some Mesa businesses may cost much more.
Another thing you should know is that this is the asking price for an Mesa business. Typically, when an entrepreneur lists a company for sale, they start with an asking price that is higher than the ultimate 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 Phoenix-Mesa-Scottsdale, AZ metro area for the last 8 quarters.
Revenue Multiples In Mesa, AZ
In the Phoenix-Mesa-Scottsdale, AZ metro area, businesses will typically sell for 0.88 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 $176,226. 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 changing in the Mesa area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $330,960 in Q4 2008.
Cash Flow Multiples In Mesa, AZ
Another popular way to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for businesses listed in the Phoenix-Mesa-Scottsdale, AZ metro area was 3.19.
So, a business with cash flows of $120,000 might have an asking price of $383,176. 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.
Here is how cash flow multiples are trending in the Mesa area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Mesa, BizBuySell.com found that the median cash flow for Mesa area businesses was $80,946 in Q4 2008.
Things to Consider When Buying a Business in Mesa, AZ
Credit is tight in this economy. Given that banks may be unwilling lend you money for the purchase of a business, you may want to look for seller financing. When a seller gives you financing, it shows they have confidence in the business, as well as confidence in your being able to run the business well enough to pay off the seller note. This advice on financing a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Mesa, AZ 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.
Share this article
Additional Resources for Entrepreneurs