Please contact us for our list of businesses for sale in Austin TX.  These businesses will either be listed or will be held by us a “pocket listing”.  A pocket listing is a business where the owners have told us they will consider selling the business but do not want it listed.  Among the businesses for sale in Austin TX, there are a few things to look for as a potential business buyer.  The first is how much cash flow the owner makes from the business.  A popular term at the lower end of the market is seller’s discretionary earnings or SDE.  In the middle market and beyond, the applicable term is EBITDA (Earnings Before Interest Taxes Depreciation Amortization).  An easy way to think of EBITDA is to look at the business’s net income from their income statement and “add-back” the interest, taxes, depreciation, and amortization.  Since all businesses have varying levels of debt and non-cash charges, this metric helps level the playing field and get a better “apples-to-apples” comparison between businesses.  The difference between the SDE and EBITDA is the seller’s salary is added-back to EBITDA to form seller’s discretionary earnings (SDE) for small businesses.  At the small business level, the seller is expected to be an owner-operator, so SDE is the more applicable term.  Middle market businesses tend to have second-level managers, so the business is not quite as dependent on the owner to run and survive.  EBITDA is the more applicable metric in the middle market.  A business broker or mergers and acquisitions professional in Austin will adjust the SDE or EBITDA for one-time charges.  So, any look at businesses for sale in Austin TX should start with the ratio between asking price and what the seller makes in cash flow from the business.  Most businesses at the lower level sell for 1.5 to 4 times SDE or middle market 2 – 5 times EBITDA.  The average is 2-3 times SDE or 3-4 times EBITDA.  Assets are another important factor.  Assets can help with financing from a bank or simply make the buyer feel more comfortable with the purchase.  It must be mentioned that having a high ratio of assets to purchase price or compared to cash flow is not always a good thing.  A high ratio can indicate that the business is not very efficient or has a low return on assets.  When looking for businesses for sale in Austin, TX, keep these points in mind when shopping for businesses.

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