Buying a Business
Cost to Buy a Business in Norfolk
Considering purchasing a company in Norfolk, Virginia? You're no doubt wondering how much a typical Norfolk, Virginia business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Norfolk.
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. 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 Virginia, take a look at the BizBuySell Virginia listings to see the latest business-for-sale listings for Norfolk and other Virginia towns.
Business Valuations in Norfolk, VA
Based on the BizBuySell.com data, the median asking price for an Norfolk business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $258,750.
That was based on 220 listings in the Virginia Beach-Norfolk-Newport News, VA-NC metro area. As such, some of the businesses used to derive the median valuation might be outside of Norfolk, but they are in the area and so are likely representative of Norfolk 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 Norfolk business for much less. The flip side is that some Norfolk businesses may cost much more.
Another thing you should know is that this is the asking price for an Norfolk business. Typically, when an 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. Based on this rule of thumb, a business listed for $225,000 might sell for between $191,250 and $202,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Virginia Beach-Norfolk-Newport News, VA-NC metro area for the last 8 quarters.
Revenue Multiples In Norfolk, VA
In the Virginia Beach-Norfolk-Newport News, VA-NC 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 business that has revenues of $200,000 might list for $152,564. Remember, however, that this is just an average for revenue multiples in Norfolk and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are tracking in the Norfolk area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $402,500 in Q4 2008.
Cash Flow Multiples In Norfolk, VA
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 Virginia Beach-Norfolk-Newport News, VA-NC metro area was 3.20.
So, a firm with cash flows of $120,000 might have an asking price of $384,025. That's if the business fits the area average. Actual cash flow multiples can vary considerably from one business to another.
The table below shows how cash flow multiples are trending in the Norfolk area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Norfolk, BizBuySell.com determined that the median cash flow for Norfolk area businesses was $100,000 in Q4 2008.
Tips for Norfolk, VA Business Buyers
The baby boomer generation has made its mark in the business world. Aging boomers are now looking toward retirement, while many younger boomers find they're ready to be their own boss. It's a good idea to look at businesses that are being sold by aging business boomers as they may be motivated sellers. This helpful tip on buying a business comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Norfolk, VA Businesses
If you have a specific business in mind and want to value the business, 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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