Buying a Business
Cost to Buy a Business in Santa Ana
Considering purchasing a company in Santa Ana, California? You're no doubt wondering how much a typical Santa Ana, California business costs to buy.
The good news is the folks at BizBuySell.com have made some data available on what businesses are going for in Santa Ana.
BizBuySell.com is the Internet's largest and most heavily trafficked business for sale marketplace. 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 California, peruse the BizBuySell California listings to see the latest business-for-sale listings for Santa Ana and other California cities.
Business Valuations in Santa Ana, CA
Based on the BizBuySell.com data, the median asking price for an Santa Ana business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $238,000.
That was based on 3915 listings in the Los Angeles-Long Beach-Santa Ana, CA metro area. Many of the businesses in the dataset are outside of Santa Ana, but they are close by and so are likely representative of Santa Ana 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 Santa Ana business for much less. At the same time, some Santa Ana businesses may cost much more.
Another thing you should know is that this is the asking price for an Santa Ana business. Typically, when a company owner lists a business for sale, they start with an asking price that is higher than the eventual sale price. The sale-price-to-asking-price ratio varies considerably but typically might be between 0.85 and 0.90. This suggests that a business listed for $325,000 might be purchased for between $276,250 and $292,500.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for businesses in the Los Angeles-Long Beach-Santa Ana, CA metro area for the last 8 quarters.
Revenue Multiples In Santa Ana, CA
In the Los Angeles-Long Beach-Santa Ana, CA metro area, businesses will typically sell for 0.79 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 $158,663. Remember, however, that this is just an average for revenue multiples in Santa Ana and surrounding communities. Some entities will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Santa Ana area, based on BizBuySell.com's data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $380,000 in Q4 2008.
Cash Flow Multiples In Santa Ana, CA
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 Los Angeles-Long Beach-Santa Ana, CA metro area was 3.01.
So, a business with cash flows of $120,000 might have an asking price of $361,467. That math only works if the business sells for the area's average multiple. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the Santa Ana area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Santa Ana, BizBuySell.com reports that the median cash flow for Santa Ana area businesses was $96,000 in Q4 2008.
Things to Consider When Buying a Business in Santa Ana, CA
Sellers want to be sure their business will continue to be successful. They want to find a buyer who has experience and will take care of the company's employees. As such, you are selling yourself to the current business owner and the professional team that represents the seller. You may think you are buying, but you also need to be selling. This useful tip for buying a business was provided by Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Santa Ana, CA 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 more information.
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