Buying a Business
Cost to Buy a Business in Richmond
Planning on buying a Richmond, Virginia business? You've come to the right place to get statistics and trend data on Richmond, Virginia business-for-sale transactions.
Fortunately, the folks at BizBuySell.com have made some data available on what businesses are going for in Richmond.
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 Virginia, check out the BizBuySell Virginia listings to to be on the inside track with the newest business-for-sale listings for Richmond and other Virginia towns.
Business Valuations in Richmond, VA
Based on the BizBuySell.com data, the median asking price for an Richmond business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $213,000.
That was based on 97 listings in the Richmond, VA metro area. As such, some of the businesses used to derive the median valuation might be outside of Richmond, but they are in the area and so are probably representative of Richmond 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 Richmond business for much less. The flip side is that some Richmond businesses may cost much more.
Another thing you should know is that this is the asking price for an Richmond business. Typically, when a business owner 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. As an example, a company listed for $275,000 might sell for between $233,750 and $247,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Richmond, VA metro area for the last 8 quarters.
Revenue Multiples In Richmond, VA
In the Richmond, VA metro area, businesses will usually sell for 1.00 times the selling company's revenues. The data indicates that is 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 $200,904. Remember, however, that this is simply an average for revenue multiples in the area. Some businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Richmond area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $350,000 in Q4 2008.
Cash Flow Multiples In Richmond, 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 Richmond, VA metro area was 3.44.
So, a company with cash flows of $120,000 might have an asking price of $412,598. 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 Richmond area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Richmond, BizBuySell.com reports that the median cash flow for Richmond area businesses was $87,000 in Q4 2008.
Things to Consider When Buying a Business in Richmond, VA
Bidding too little for a company is a bad strategy. Lowball bids are very rarely accepted. By making too low of a bid for a business, you risk offending the seller and ruining your chances of completing a deal. This helpful tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Richmond, VA 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.
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