Buying a Business
Cost to Buy a Business in Sugar Land
Considering purchasing a company in Sugar Land, Texas? Your first question will probably be "How much does it cost to buy a business in Sugar Land?"
The good news is the folks at BizBuySell.com have made some data available on what it costs to buy a business in Sugar Land.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. Their listings include almost all of the available listings from business brokers nationwide. They also have many FSBO (for sale by owner) business-for-sale listings.
If you are looking to buy a business in Texas, check out the BizBuySell Texas listings to get instant access to business-for-sale listings for Sugar Land and other Texas cities.
Business Valuations in Sugar Land, TX
According to BizBuySell.com, the median asking price for an Sugar Land business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $285,000.
That was based on 515 listings in the Houston-Sugar Land-Baytown, TX metro area. As such, some of the businesses used to derive the median valuation might be outside of Sugar Land, but they are close by and so are likely representative of Sugar Land 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 Sugar Land business for much less. The flip side is that some Sugar Land businesses may cost much more.
Importantly, this is the asking price for an Sugar Land business. Typically, when an 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. 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 Houston-Sugar Land-Baytown, TX metro area for the last 8 quarters.
Sugar Land, TX Revenue Multiples
In the Houston-Sugar Land-Baytown, TX metro area, businesses will typically sell for 1.07 times the selling company's revenues. This 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 $214,039. Remember, however, that this is simply an average for revenue multiples in Sugar Land and surrounding communities. Some firms will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are changing in the Sugar Land area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $400,444 in Q4 2008.
Cash Flow Multiples In Sugar Land, TX
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 Houston-Sugar Land-Baytown, TX metro area was 3.70.
So, a company with cash flows of $120,000 might have an asking price of $443,479. 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 Sugar Land area, based on BizBuySell.com's quarterly reports.
Flow Multiple
In case you were wondering what typical cash flows are for a business in Sugar Land, BizBuySell.com found that the median cash flow for Sugar Land area businesses was $102,365 in Q4 2008.
Things to Consider When Buying a Business in Sugar Land, TX
Credit is tight in this economy. Given that banks may be unwilling lend you money for the purchase of a business, you may want to look for seller financing. When a seller gives you financing, it shows they have confidence in the business, as well as confidence in your being able to run the business well enough to pay off the seller note. This advice on financing a business purchase comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Sugar Land, TX 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 published on a quarterly basis. If you find this data interesting, be sure to visit BizBuySell.com Insights Report for more information.
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