Buying a Business
Cost to Buy a Business in Tucson
Considering purchasing a company in Tucson, Arizona? You're no doubt wondering how much a typical Tucson, Arizona business costs to buy.
Fortunately, the folks at BizBuySell.com have made some data available on what it costs to buy a business in Tucson.
BizBuySell.com is the largest online marketplace for business-for-sale transactions. When a business broker in a local city has a listing, the broker will typically post it 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 Arizona, check out the BizBuySell Arizona listings to see the latest business-for-sale listings for Tucson and other Arizona towns.
Business Valuations in Tucson, AZ
According to BizBuySell.com, the median asking price for an Tucson business-for-sale listing in Q4 2008, the quarter when they most recently released their data, was $245,000.
That was based on 204 listings in the Tucson, AZ metro area. Many of the businesses in the dataset are outside of Tucson, but they are in the area and so are probably representative of Tucson 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 Tucson business for much less. At the same time, some Tucson businesses may cost much more.
Another thing you should know is that this is the asking price for an Tucson 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 ratios depend on deal specifics 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 for sale in the Tucson, AZ metro area for the last 8 quarters.
Revenue Multiples In Tucson, AZ
In the Tucson, AZ metro area, businesses will typically sell for 0.87 times the selling company's revenues. That was the mean revenue multiple for Q4 2008 in this metro area.
In other words, a firm with revenues of $200,000 might list for $174,290. Remember, however, that this is just an average for revenue multiples in Tucson and surrounding communities. Some businesses will have higher revenue multiples and others will have lower revenue multiples.
Here is how median revenue multiples are trending in the Tucson area, based on BizBuySell.com's quarterly reports.
According to BizBuySell.com, the median revenues for its business-for-sale listings was $358,466 in Q4 2008.
Cash Flow Multiples In Tucson, AZ
Another common method to value a business is through cash flow multiples.
For Q4 2008, the average cash flow multiple for businesses listed in the Tucson, AZ metro area was 3.50.
So, a firm with cash flows of $120,000 might have an asking price of $419,602. 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 Tucson area, based on BizBuySell.com's quarterly reports.
Flow Multiple
In case you were wondering what typical cash flows are for a business in Tucson, BizBuySell.com reports that the median cash flow for Tucson area businesses was $86,982 in Q4 2008.
Things to Consider When Buying a Business in Tucson, AZ
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 Tucson, AZ Businesses
If you have a specific business in mind and want to get a ballpark business valuation, 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 additional information.
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