Delivery Business Valuation Multiples
Delivery businesses play an essential role in the modern shopping experience. These companies serve as a link between retailers and customers. If you want to buy, grow, or sell a delivery company, understanding its value on today’s market is crucial. This enables decision-makers to plan strategically and ensure a favorable outcome. One of the simplest ways to estimate the fair market value of a delivery business is by applying delivery business valuation multiples.
In this article, we highlight the most common valuation multiples for a delivery business. While these metrics are a helpful starting point, they should be used with caution. Since every delivery business is different, valuation multiples alone may not reflect your company’s true value. As such, it is best to work with a certified and experienced valuation expert for reliable results.
Peak Business Valuation is a professional business appraiser that values delivery companies across the country. We are here to provide a timely and accurate business valuation! In addition, we can answer any questions you may have about delivery business valuations. Get started by scheduling your free consultation with Peak Business Valuation below!
What Are Delivery Business Valuation Multiples?
Valuation multiples are financial ratios used to estimate a company’s fair market value based on its financial performance. These metrics suggest what a buyer might be willing to pay for a delivery business on the current market. To identify relevant delivery business valuation multiples, valuation experts look at recent transactions involving similar businesses. For more insights, see Valuation Multiples for Couriers and Local Delivery Companies.
Common Delivery Business Valuation Multiples
Peak Business Valuation often utilizes SDE, EBITDA, and revenue multiples when valuing delivery companies. Each multiple assesses a different aspect of the company’s financials to calculate its value. For the most accurate results, business appraisers typically apply more than one multiple. In the following sections, we detail these multiples and provide average ranges used in delivery business valuations.
SDE Multiples for a Delivery Business
Seller’s Discretionary Earnings (SDE) represent the financial benefit a single owner-operator receives from the business. SDE is determined by adjusting the company’s net income to add back discretionary, non-operating, or one-time expenses. SDE multiples are most applicable for small to mid-sized delivery businesses.
Formula: Business Value = SDE × Multiple
Range: Delivery businesses often sell for 2.76x to 3.32x SDE.
EBITDA Multiples for a Delivery Business
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This metric focuses on a delivery business’s core profitability and is widely used for valuing larger companies with more stable earnings. It is also a common tool for comparing the performance of similar delivery businesses on the market.
Formula: Business Value = EBITDA × Multiple
Range: On average, delivery business EBITDA multiples range between 3.48x and 4.05x.
Revenue Multiples for a Delivery Business
Revenue reflects the total sales a business generates over a 12-month period. Although revenue multiples provide insight on company size and market activity, they do not account for profitability. As such, Peak Business Valuation typically uses revenue multiples alongside cash flow-based metrics like SDE and EBITDA.
Formula: Business Value = Revenue × Multiple
Range: Delivery companies generally transact between 0.57x and 0.88x revenue.
Peak Business Valuation incorporates delivery business valuation multiples as part of a thorough valuation process. If you have questions or need a formal delivery business valuation, we are here to assist. Schedule a free consultation below to get started.
How to Value a Delivery Business Using Multiples
Using valuation multiples provides a rough estimate of a delivery business’s value. However, a deeper analysis is required if you need a precise valuation. During a professional business valuation, experts review financial performance, gather market data, assess the industry outlook, and consider a variety of operational factors. Weighted averages may also be applied when revenue or earnings vary significantly from year to year. For more guidance, see How to Value a Courier and Local Delivery Company.
Rules of Thumb for Delivery Businesses
SDE, EBITDA, and revenue multiples are often considered rule-of-thumb valuation methods. While applying multiples offers quick insights, they do not reflect the distinct qualities of every delivery business. For a reliable delivery business valuation, it is best to work with a certified business appraiser. These professionals conduct a thorough evaluation of the unique factors that affect value. If you have any questions about the valuation process, contact Peak Business Valuation today.
Factors Affecting Delivery Business Valuation Multiples
Valuation multiples for delivery businesses can change depending on several factors. Understanding these value drivers can help owners improve delivery business operations and maximize the company’s overall value. Some key considerations include:
- Fleet Maintenance: A well-maintained fleet reduces risk and enhances delivery reliability and capacity. This increases buyer confidence and can raise valuation multiples.
- Route Optimization: Establishing efficient logistics operations can help lower cost per delivery, improving a delivery business’s margins and overall value.
- Service Agreement: Securing long-term contracts with key clients such as eCommerce companies and medical suppliers promotes recurring revenue and financial stability. This is a valuable attribute for a delivery business.
- Advanced Technology: Adopting advanced tracking systems and automation reduces operational costs and enhances delivery efficiency. This ensures timely deliveries, minimal errors, and satisfied customers, boosting a delivery company’s worth.
Read Value Drivers for Couriers and Local Delivery Companies to learn more.
Conclusion
If you need a quick, informed estimate of a delivery business’s fair market value, valuation multiples are a helpful reference. However, these tools typically offer limited estimates that do not account for the important nuances of every business. By working with a certified business appraiser, you can ensure an accurate estimate supported by standardized valuation techniques.
Peak Business Valuation frequently works with delivery companies throughout the United States. We are here to deliver a reliable delivery business valuation and answer any questions you may have. Start by scheduling a free consultation with Peak Business Valuation below!
See Delivery Business Valuations and Valuing a Courier and Local Delivery Service Company for more insights.
