Business Valuations – The top 20 most valuable businesses
Ever wonder what a business is worth? Unless you are a business owner, the tax collector, or a business broker, it may not cross your mind. But, I came across some interesting information on BizBuySell.com and I figured I would share.
FYI, BizBuySell is one of the websites that Business Brokers use to advertise and list the businesses they have for sale. It is definitely one of the largest business for sale websites. They collect tons of data related to the sale of business around the world, and they publish it annually. I took some time to transfer some of the data to an excel worksheet, and started to analyze and make the data meaningful, to me at least. I came up with some interesting revelations.
First of all, the data below was taken from 9440 business sales reported to the site. The businesses represent 136 business types. To account for outliers, I removed any business types that had fewer that 10 sales.
How is the value of the business determined?
The data below includes the business type, the number of sales in 2018, and the cash flow multiple. The cash flow multiple is a measure of the value of the business, it is very similar to a P/E ratio used in the stock market.
Important note: The Average Cash Flow Multiple of all businesses was 2.7
The Cash Flow Multiple is ratio of the sale price of the business and the adjusted earnings of the business. For example, if you own a business that has adjusted earnings of $100K, and you are able to sell it for $200K, then your business has a Cash Flow multiple of 2. The higher the Cash Flow Multiple, the more valuable (or expensive) the business is. As you will see, this multiple varies among industry/business type. You can use this data to estimate the value of your business. If your business type happens to be listed below, take your adjusted earnings (Seller’s Discretionary Earnings) and multiply it by the cash flow multiple below, and just like that, you have a great estimate of the value of your business. (If you want help with a confidential and free business valuation, please contact me)
The 20 Most Valuable Businesses
Is you business listed below? If so, congratulations! You own one of the most valuable business types. The list isn’t too surprising. The top 6 spots are businesses that usually include real estate, so the high cash flow multiple is not a surprise. What is a surprise, a huge surprise, is seeing DONUT SHOP in the top 20!
|
Business Type |
Number of Reported Sales |
Cash Flow Multiple (average) |
|
Hotels |
29 |
9.11 |
|
Bed and Breakfasts |
12 |
8.37 |
|
Motels |
20 |
4.75 |
|
Real Estate Businesses |
42 |
4.5 |
|
Car Washes |
42 |
4.29 |
|
Assisted Living and Nursing Homes |
22 |
4.2 |
|
Breweries |
10 |
3.74 |
|
Software and App Companies |
17 |
3.65 |
|
Donut Shops |
31 |
3.6 |
|
Food and Related Product Manufacturers |
34 |
3.54 |
|
Day Care and Child Care Centers |
91 |
3.43 |
|
Industrial and Commercial Machinery Manufacturers |
12 |
3.38 |
|
Auto, Boat and Aircraft Manufacturers |
10 |
3.32 |
|
Insurance Agencies |
57 |
3.28 |
|
Metal Product Manufacturers |
61 |
3.24 |
|
Grocery Stores and Supermarkets |
66 |
3.2 |
|
Lumber and Wood Products Manufacturers |
25 |
3.15 |
|
Machine Shops and Tool Manufacturers |
25 |
3.1 |
|
Electronic and Electrical Equipment Manufacturers |
19 |
2.99 |
|
Rubber and Plastic Products Manufacturers |
13 |
2.99 |
Cash Flow Multiples for all Businesses
If your business didn’t make the top 20, not to worry. Posted below is the full list, listed alphabetically by business type.
By the way, a business valuation is more complicated that using a multiple and the business earnings. If you would like a comprehensive and confidential business valuation, give us a call or shoot us an email.
|
Business Type |
Number of Reported Sales |
Cash Flow Multiple (average) |
|
Accounting Businesses and Tax Practices |
81 |
2.03 |
|
All Non-Classifiable Establishments |
17 |
2.87 |
|
Architecture and Engineering Firms |
9 |
2.34 |
|
Art Galleries |
3 |
4.22 |
|
Assisted Living and Nursing Homes |
22 |
4.2 |
|
Auto Repair and Service Shops |
268 |
2.43 |
|
Auto, Boat and Aircraft Manufacturers |
10 |
3.32 |
|
Bakeries |
85 |
1.79 |
|
Banking and Loan Businesses |
11 |
1.28 |
|
Bars, Pubs and Taverns |
343 |
2.6 |
|
Bed and Breakfasts |
12 |
8.37 |
|
Bike Shops |
7 |
2.72 |
|
Bowling Alleys |
2 |
1.78 |
|
Breweries |
10 |
3.74 |
|
Building Material and Hardware Stores |
35 |
2.9 |
|
Car Dealerships |
30 |
2.93 |
|
Car Washes |
42 |
4.29 |
|
Catering Companies |
5 |
2.26 |
|
Cell Phone and Computer Repair and Service Businesses |
18 |
2.19 |
|
Chemical and Related Product Manufacturers |
3 |
2.68 |
|
Cleaning Businesses |
97 |
2.12 |
|
Clothing and Accessory Stores |
121 |
2.04 |
|
Clothing and Fabric Manufacturers |
14 |
2.83 |
|
Coffee Shops and Cafes |
187 |
2.14 |
|
Commercial Laundry Businesses |
14 |
2.86 |
|
Concrete Businesses |
8 |
2.11 |
|
Convenience Stores |
273 |
2.35 |
|
Dance, Pilates and Yoga Studios |
13 |
2.29 |
|
Day Care and Child Care Centers |
91 |
3.43 |
|
Dental Practices |
13 |
1.75 |
|
Dog Daycare and Boarding Businesses |
18 |
2.49 |
|
Dollar Stores |
8 |
1.81 |
|
Donut Shops |
31 |
3.6 |
|
Dry Cleaners |
158 |
2.27 |
|
Durable Goods Wholesalers and Distributors |
73 |
2.82 |
|
Electrical and Mechanical Contracting Businesses |
36 |
2.21 |
|
Electronic and Electrical Equipment Manufacturers |
19 |
2.99 |
|
Energy and Petroleum Production Businesses |
2 |
2.75 |
|
Equipment Rental and Dealers |
5 |
2.44 |
|
Flower Shops |
57 |
2 |
|
Food and Related Product Manufacturers |
34 |
3.54 |
|
Food Trucks |
6 |
1.64 |
|
Furniture and Fixtures Manufacturers |
14 |
2.79 |
|
Furniture and Furnishings Stores |
365 |
2.46 |
|
Gas Stations |
300 |
2.56 |
|
Glass, Stone and Concrete Manufacturers |
12 |
2.98 |
|
Golf Courses and Service Businesses |
5 |
1.5 |
|
Graphic and Web Design Businesses |
9 |
2.47 |
|
Greenhouses |
4 |
3.15 |
|
Grocery Stores and Supermarkets |
66 |
3.2 |
|
Gyms and Fitness Centers |
63 |
2.21 |
|
Hair Salons and Barber Shops |
213 |
1.83 |
|
Health Food and Nutrition Businesses |
18 |
2.59 |
|
Heavy Construction Businesses |
7 |
3.72 |
|
Home Health Care Businesses |
64 |
2.4 |
|
Hotels |
29 |
9.11 |
|
HVAC Businesses |
75 |
2.24 |
|
Ice Cream and Frozen Yogurt Shops |
175 |
2.05 |
|
Industrial and Commercial Machinery Manufacturers |
12 |
3.38 |
|
Insurance Agencies |
57 |
3.28 |
|
IT and Software Service Businesses |
22 |
2.85 |
|
Jewelry Stores |
8 |
2.39 |
|
Juice Bars |
24 |
2.2 |
|
Junk and Salvage Yards |
3 |
5.83 |
|
Landscaping and Yard Service Businesses |
106 |
1.81 |
|
Laundromats and Coin Laundry Businesses |
87 |
2.83 |
|
Legal Services and Law Firms |
11 |
1.79 |
|
Limo and Passenger Transportation Businesses |
20 |
2.41 |
|
Liquor Stores |
301 |
2.85 |
|
Locksmith Businesses |
1 |
1.69 |
|
Lumber and Wood Products Manufacturers |
25 |
3.15 |
|
Machine Shops and Tool Manufacturers |
25 |
3.1 |
|
Magazines and Newspapers |
9 |
1.9 |
|
Marine/Boat Services and Dealers |
16 |
2.58 |
|
Massage Businesses |
15 |
1.75 |
|
Medical Billing Businesses |
5 |
2.81 |
|
Medical Device and Product Manufacturers |
8 |
2.63 |
|
Medical Practices |
22 |
2.44 |
|
Metal Product Manufacturers |
61 |
3.24 |
|
Mining Businesses |
4 |
4.41 |
|
Mining Businesses |
4 |
4.41 |
|
Motels |
20 |
4.75 |
|
Moving and Shipping Businesses |
49 |
2.44 |
|
Nail Salons |
22 |
1.51 |
|
Nondurable Goods Wholesalers and Distributors |
53 |
2.43 |
|
Nursery and Garden Centers |
9 |
3.55 |
|
Other Agriculture Businesses |
10 |
2.54 |
|
Other Automotive and Boat Businesses |
7 |
3.4 |
|
Other Beauty and Personal Care Businesses |
9 |
1.62 |
|
Other Building and Construction Businesses |
180 |
2.12 |
|
Other Communication and Media Businesses |
25 |
2.24 |
|
Other Education and Children Businesses |
37 |
2.26 |
|
Other Entertainment and Recreation Businesses |
70 |
2.65 |
|
Other Financial Services Businesses |
21 |
2.34 |
|
Other Health Care and Fitness Businesses |
103 |
2.36 |
|
Other Manufacturing Businesses |
63 |
2.98 |
|
Other Online and Technology Businesses |
60 |
2.79 |
|
Other Pet Service Businesses |
7 |
2.54 |
|
Other Retail Businesses |
196 |
2.2 |
|
Other Service Businesses |
439 |
1.99 |
|
Other Transportation and Storage Businesses |
35 |
2.15 |
|
Other Travel Businesses |
1 |
2.3 |
|
Other Wholesalers and Distributors |
24 |
2.65 |
|
Packaging Businesses |
4 |
2.09 |
|
Paper Manufacturers and Printing Businesses |
41 |
2.76 |
|
Pawn Shops |
4 |
1.36 |
|
Pest Control Businesses |
7 |
2.21 |
|
Pet Grooming Businesses |
30 |
1.95 |
|
Pet Stores and Supply Businesses |
21 |
2.24 |
|
Pharmacies |
35 |
2.22 |
|
Plumbing Businesses |
30 |
2.19 |
|
Preschools |
8 |
3.06 |
|
Production Companies |
4 |
2.04 |
|
Property Management Businesses |
33 |
2.19 |
|
Real Estate Businesses |
42 |
4.5 |
|
Restaurants |
2195 |
2.08 |
|
Routes |
354 |
2.02 |
|
Rubber and Plastic Products Manufacturers |
13 |
2.99 |
|
Schools |
12 |
2.68 |
|
Security Businesses |
7 |
2.7 |
|
Sign Manufacturers and Businesses |
31 |
2.43 |
|
Smoke Shops |
23 |
1.6 |
|
Software and App Companies |
17 |
3.65 |
|
Spas |
35 |
1.86 |
|
Staffing Agencies |
26 |
2.7 |
|
Storage Facilities and Warehouses |
12 |
1.78 |
|
Tanning Salons |
12 |
1.71 |
|
Towing Companies |
5 |
2.89 |
|
Travel Agencies |
2 |
0.7 |
|
Tree Farms and Orchards |
4 |
4.87 |
|
Truck Stops |
6 |
5.13 |
|
Trucking Companies |
23 |
2.84 |
|
Vending Machine Businesses |
46 |
2.34 |
|
Waste Management and Recycling Businesses |
9 |
2.66 |
|
Websites and Ecommerce Businesses |
353 |
2.99 |
If you have any questions about business valuations, cash flow multiples, or Seller’s Discretionary Earnings or about buying or selling a business, please don’t hesitate to contact us. We have been helping entrepreneurs maximize the value of their business and plan for their eventual exit.
Call 1-800-Biz-Broker or email us today.