Buying a Business
Cost to Buy a Business in Santa Clara
Considering purchasing a company in Santa Clara, California? You've come to the right place to get statistics and trend data on Santa Clara, California business-for-sale transactions.
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Santa Clara.
BizBuySell.com is the Internet's largest and most heavily trafficked business for sale marketplace. Their listings include almost all of the available listings from business brokers nationwide. 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, check out the BizBuySell California listings to see the latest business-for-sale listings for Santa Clara and other California municipalities.
Santa Clara, CA Business Valuations
Based on the BizBuySell.com data, the median asking price for an Santa Clara business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $260,000.
That was based on 161 listings in the San Jose-Sunnyvale-Santa Clara, CA metro area. As such, some of the businesses used to derive the median valuation might be outside of Santa Clara, but they are in the area and so are probably representative of Santa Clara 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 Clara business for much less. At the same time, some Santa Clara businesses may cost much more.
Importantly, this is the asking price for an Santa Clara business. Typically, when a small business owner lists a business for sale, they start with an asking price that is higher than the contracted 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 companies in the San Jose-Sunnyvale-Santa Clara, CA metro area for the last 8 quarters.
Santa Clara, CA Revenue Multiples
In the San Jose-Sunnyvale-Santa Clara, CA metro area, businesses will usually 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 $164,104. Remember, however, that this is just an average for revenue multiples in Santa Clara and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Santa Clara area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $425,000 in Q4 2008.
Cash Flow Multiples In Santa Clara, CA
Another useful technique to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the San Jose-Sunnyvale-Santa Clara, CA metro area was 3.47.
So, a company with cash flows of $120,000 might have an asking price of $416,356. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
The table below shows how cash flow multiples are trending in the Santa Clara area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Santa Clara, BizBuySell.com reports that the median cash flow for Santa Clara area businesses was $100,000 in Q4 2008.
Things to Consider When Buying a Business in Santa Clara, CA
Before you start shopping for a business to buy, establish your acquisition criteria. It's important to define the parameters of your search. Include geographic requirements, criteria on the transaction size, and other business attributes that are important to you. Having set criteria will help you demonstrate that you are a thoughtful and committed buyer. It will also streamline your business buying process. This helpful advice on how to buy a business comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Santa Clara, 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 more information.
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