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Top 20 Business Valuations

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.

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