Buying a Business
Cost to Buy a Business in Ontario
Considering purchasing a company in Ontario, California? You're no doubt wondering how much a typical Ontario, California business costs to buy.
Luckily, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Ontario.
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 California, check out the BizBuySell California listings to get instant access to business-for-sale listings for Ontario and other California towns.
Business Valuations in Ontario, CA
According to BizBuySell.com, the median asking price for an Ontario business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 633 listings in the Riverside-San Bernardino-Ontario, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Ontario, but they are nearby and so are probably representative of Ontario 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 Ontario business for much less. At the same time, some Ontario businesses may cost much more.
Importantly, this is the asking price for an Ontario business. Typically, when a business 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. As such, a business listed for $175,000 might sell for between $148,750 and $157,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Riverside-San Bernardino-Ontario, CA metro area for the last 8 quarters.
Revenue Multiples In Ontario, CA
In the Riverside-San Bernardino-Ontario, CA metro area, businesses will typically sell for 0.82 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 $164,567. Remember, however, that this is just an average for revenue multiples in Ontario and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are moving in the Ontario area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $439,766 in Q4 2008.
Cash Flow Multiples In Ontario, CA
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 Riverside-San Bernardino-Ontario, CA metro area was 3.12.
So, a business with cash flows of $120,000 might have an asking price of $374,571. 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 Ontario area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Ontario, BizBuySell.com reports that the median cash flow for Ontario area businesses was $100,000 in Q4 2008.
Tips for Ontario, CA Business Buyers
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 Ontario, CA 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 additional information.
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