Buying a Business
Cost to Buy a Business in Tacoma
If you want to buy a business in Tacoma, Washington, you're no doubt wondering how much a typical Tacoma, Washington business costs to buy.
Fortunately, a company called BizBuySell.com has made some data available on what it costs to buy a business in Tacoma.
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 Washington, check out the BizBuySell Washington listings to see the latest business-for-sale listings for Tacoma and other Washington municipalities.
Business Valuations in Tacoma, WA
Based on the BizBuySell.com data, the median asking price for an Tacoma business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $250,000.
That was based on 321 listings in the Seattle-Tacoma-Bellevue, WA metro area. Many of the businesses in the dataset are outside of Tacoma, but they are in the area and so are probably representative of Tacoma 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 Tacoma business for much less. The flip side is that some Tacoma businesses may cost much more.
Another thing you should know is that this is the asking price for an Tacoma business. Typically, when an 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 ratios depend on deal specifics but typically might be between 0.85 and 0.90. Given this industry norm, if a small business owner were to list a company for $300,000, it might sell for between $255,000 and $270,000.
If you are interested in trends in business-for-sale asking prices, here are the median asking prices for companies in the Seattle-Tacoma-Bellevue, WA metro area for the last 8 quarters.
Tacoma, WA Revenue Multiples
In the Seattle-Tacoma-Bellevue, WA metro area, businesses will typically sell for 0.67 times the selling company's revenues. The data indicates that is 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 $134,288. Remember, however, that this is only an average for revenue multiples in the area. Some companies will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Tacoma area, based on BizBuySell.com's economic data.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $456,249 in Q4 2008.
Cash Flow Multiples In Tacoma, WA
Another common method to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for listed businesses in the Seattle-Tacoma-Bellevue, WA metro area was 3.19.
So, a business with cash flows of $120,000 might have an asking price of $382,642. That's if the business fits the area average. Most businesses will not conform to industry- or area averages.
Here is how cash flow multiples are trending in the Tacoma area, based on BizBuySell.com's quarterly reports.
Flow Multiple
If you are interested in what cash flows are for a business in Tacoma, BizBuySell.com reports that the median cash flow for Tacoma area businesses was $103,224 in Q4 2008.
Things to Consider When Buying a Business in Tacoma, WA
It is important to keep in mind that no business is perfect. It is not unusual for buyers to find a few inconsistencies or anomalies in a business when they get to the due diligence stage. These should be questioned and understood. If the information turns out to be structural or material, then you may consider either canceling a deal or renegotiating a deal based on the new facts. However, be careful not to over-react and assume that any deviation is a deal-killer. Oftentimes, these differences can be explained and overcome with thoughtful communication between all the parties. This good business buying tip comes from Domenic Rinaldi, managing partner of Chicagoland Sunbelt, a leading business brokerage firm.
Business Valuations for Tacoma, WA 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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