Concrete Company Multiples
Whether you are buying, selling, or seeking financing for a concrete business, determining accurate valuation multiples is vital. Having the right multiples for a concrete company can help you get an accurate estimate of your business’s value. As a professional business appraiser, Peak Business Valuation frequently works with concrete company multiples. In this article, we highlight the most common valuation multiples for concrete companies and provide useful insights to help you better understand the value of your business.
It is important to note that there are multiple factors that determine which valuation multiples apply to your concrete company. To determine the most accurate multiples for your concrete company, it is best to connect with a professional business appraiser. An appraiser can conduct a thorough analysis of your financials and market trends to determine applicable concrete company multiples.
As a professional business appraiser, Peak Business Valuation values concrete companies across the United States! We are here to provide you with an accurate concrete business valuation and answer any questions you have on concrete company multiples. Get started today by scheduling a free consultation with Peak below!
What are Concrete Company Multiples?
In simple terms, a valuation multiple is a number that indicates how much someone would be willing to pay to acquire a business on the market. These values are generally based on a specific financial metric, such as SDE, EBITDA, or Revenue. When using the market approach to value a concrete company, a valuation expert will determine which multiples are most applicable. To learn more, check out Valuation Multiples for Concrete Contractors.
Common Concrete Company Valuation Multiples
The following sections explain SDE, EBITDA, and Revenue multiples for a concrete company. Keep in mind that the ranges we discuss are general benchmarks. For the most accurate valuation, it is best to work with a professional valuation expert. Peak Business Valuation is here to assist you! Reach out if you have any questions.
SDE Multiples for a Concrete Company
The SDE multiple is very common when buying or selling a concrete company. It calculates a concrete company’s value based on its seller’s discretionary earnings (SDE). To determine SDE, the business appraiser adjusts the company’s earnings for fair owner compensation and adds back non-recurring and discretionary expenses. This multiple can vary depending on the owner’s level of involvement in the company.
Formula: Value = SDE × Multiple
Range: SDE multiples for concrete companies typically range from 2.23x – 3.03x SDE.
Concrete Company EBITDA Multiples
Next, EBITDA multiples help determine a company’s value by looking at its earnings before interest, taxes, depreciation, and amortization (EBITDA). This accounts for the impact of factors like debt, taxes, and accounting procedures – making it easier to compare similar concrete companies. Business appraisers frequently use this multiple to gain useful insights into a concrete company’s future earnings potential and ROI.
Formula: Value = EBITDA × Multiple
Range: EBITDA multiples for concrete companies generally range from 3.40x – 3.78x EBITDA.
Revenue Multiples for a Concrete Company
Revenue multiples determine a company’s value based on the total revenue generated over the past 12 months. Business appraisers generally only use this metric when the company’s expenses reflect industry averages. Otherwise, this multiple is often less precise due to variations in profit margins and cost structures. As such, Peak often relies on cash flow-based multiples for more accurate results.
Formula: Value = Revenue × Multiple
Range: Revenue multiples for concrete companies typically range from 0.38x – 0.73x revenue.
How to Value a Concrete Company Using Multiples
At Peak Business Valuation, our valuation experts often use a combination of the market, income, and asset approaches. The method a business appraiser uses depends on a variety of factors, including market trends and the company’s financial status. Weighted averages may also be applied to get a more precise estimate.
No matter what approach is used, the valuation process involves reviewing financial statements, key value drivers for a concrete company, and a variety of other factors. For more information on how to value a concrete company, reach out to Peak to schedule a free consultation. You can also refer to our guide, How to Value a Concrete Company.
Rules of Thumb for Concrete Companies
There are various basic guidelines or industry benchmarks that can help estimate the value of your concrete company. Keep in mind, that these rules of thumb are often based on over-simplified formulas. For example, applying a multiple to a company’s cash flow provides a quick, broad estimate. However, that estimate is likely inaccurate since it does not account for unique and complex factors. The best way to get an accurate estimate of the value of a concrete company is through a professional business valuation. Peak Business Valuation is happy to help! Schedule your consultation to get started.
Factors Affecting Concrete Company Multiples
The value of a concrete company can be influenced by a wide range of factors. Below, we highlight some key considerations that can impact concrete company multiples. Understanding these factors can help you make strategic adjustments to increase the value of a concrete company.
- Customer Diversification: Relying on only a handful of clients poses a significant financial risk to concrete companies. Businesses that demonstrate financial stability often command higher valuation multiples.
- Project & Contract Portfolio: Concrete companies with a strong portfolio of signed contracts and long-term agreements can expect more valuable multiples.
- Recurring Revenue: Generating recurring revenue provides a major advantage for concrete companies. This indicates sustainability, resulting in a favorable valuation multiple.
- Equipment Quality: Having new, quality equipment improves a concrete business’s asset base and reduces future expenditures. This can have a significant impact on the value of a concrete company. Check out Concrete Equipment Appraisals.
Concrete business multiples are mainly derived from market transactions. However, the unique conditions of the company also have an impact on valuation multiples. See Value Drivers for Concrete Contractors to learn more. For accurate concrete company multiples, reach out to Peak Business Valuation!
Conclusion
Peak Business Valuation is an experienced business appraiser that provides concrete company valuations on a regular basis. We can provide you with the most accurate valuation multiples for your business. In addition, Peak is here to answer any questions on how to value a concrete company. Get started by scheduling a free consultation with Peak below!
For additional guidance, see Concrete Company Valuations or Valuing a Concrete Company.
