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Valuation Rule of Thumb

Reprinted by permission of Business Brokerage Press

The following 2011 data is supplied from The Business Reference Guide published by Business Brokerage Press. This is an excellent resource for any individual involved in valuing, buying or selling privately held businesses. This 700 page guide also details reasoning, alternative methods, outside references and pricing tips for valuing small businesses - as well as the limitations of relying on rules of thumb. We have included only a selected portion of the businesses covered and methods outlined within the guide.

Industry "Rule of Thumb" Valuation
Accounting Firms 100–125% of annual revenues
Auto Dealers (New Cars) 0–10% of annual sales + inventory
Book Stores 15% of annual sales + inventory
Coffee Shops (Gourmet) 40% of annual sales + inventory
Day Care Centers 45–50% of annual sales incl. inventory
Dental Practices 60–65% of annual revenues incl. inventory
Dry Cleaners 70–80% of annual sales + Inventory
Engineering Services 40–45% of annual revenues
Flower Shops 30–35% of annual sales + inventory
Food Shops (Gourmet) 30% of annual sales + inventory
Gas Stations (w/o C-Store) 15–20% of annual sales + inventory
Gift/Card Shops 35% of annual sales incl. inventory
Grocery Store (Supermarket) 15% of annuals sales + inventory
Hardware Stores 45% of annual sales incl. inventory
Insurance Agencies 125–150% of annual revenues
Landscape Businesses 45% of annual sales
Law Practices 90–100% of annuals revenues
Liquor Stores 40–45% of annuals sales + inventory
Restaurants (Full-Serve) 30–35% of annuals sales + inventory
Restaurants (Ltd-Serve)  30–40% of annuals sales + inventory
Sporting Goods Stores 25% of annual sales + inventory
Taverns/Bars 40% of annuals sales + inventory
Travel Agencies 35–40% of annual commissions
Veterinary Practices 70% of annual revenues + inventory

 

 

 

 

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2013 Financial Content, 5000 Industry Choices, Local-US Industry Financials