Moving Company Valuation Multiples
In recent years, demand for quality moving services has increased as families and businesses relocate for new opportunities, lifestyle preferences, and a variety of other factors. As such, pursuing business opportunities in the moving industry can be lucrative. Whether you are buying, growing, or selling a moving company, understanding its worth on the current market is essential. For a quick fair market value estimate, business owners often turn to moving company valuation multiples. These tools offer useful insights based on the company’s financial performance and recent market trends.
In this article, we explore the most common moving company valuation multiples. While multiples provide a helpful starting point, they do not account for the unique nuances of each business. If you are looking for a reliable moving company valuation, it is best to connect with an experienced business appraiser.
Peak Business Valuation is a trusted business appraiser that regularly works with moving companies in the United States. We are happy to deliver a timely and accurate business valuation for a moving company. In addition, we can discuss any questions you may have on the valuation process. Get started today by scheduling a free consultation below!
What Are Moving Company Valuation Multiples?
Valuation multiples are financial ratios that help estimate the fair market value of a business. This involves comparing the company’s financial data to that of similar businesses that recently sold. Applying valuation multiples helps business owners understand what a buyer might pay for a moving company based on its financial performance. To determine applicable moving company valuation multiples, valuation experts conduct thorough market research. For more information, refer to Valuation Multiples for a Moving Company.
Common Moving Company Valuation Multiples
At Peak Business Valuation, business appraisers frequently use SDE, EBITDA, and revenue multiples when valuing a moving company. Each multiple estimates a business’s value from a different perspective. The valuation process often involves a combination of various methods and multiples to ensure accuracy. Below, we outline and provide an average range of SDE, EBITDA, and revenue multiples.
SDE Multiples for a Moving Company
Seller’s Discretionary Earnings (SDE) reflect the total financial benefit a single owner derives from the business. SDE is calculated by adjusting net income to include certain discretionary or non-recurring expenses, such as owner salary, travel, or one-time costs. SDE multiples are most often used for small to mid-sized moving businesses.
Formula: Business Value = SDE × Multiple
Range: Moving companies typically transact between 2.18x and 3.06x SDE.
EBITDA Multiples for a Moving Company
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. This metric reflects the core profitability of the business by excluding non-operational expenses. EBITDA multiples are more applicable to larger moving companies with consistent earnings.
Formula: Business Value = EBITDA × Multiple
Range: On average, EBITDA multiples can range from 3.23x and 4.30x for moving businesses.
Revenue Multiples for a Moving Company
Revenue refers to the total income generated by the business, typically over a 12-month period. These multiples are useful when financial data is limited or when industry margins are slim, but they do not consider profitability. As such, cash-flow multiples, like SDE and EBITDA, are often preferred.
Formula: Business Value = Revenue × Multiple
Range: Revenue multiples for moving companies often fall between 0.41x and 0.65x revenue.
At Peak Business Valuation, we frequently utilize these multiples when performing moving company valuations. If you have any questions about valuation multiples or receiving a professional moving company valuation, we are happy to assist. Schedule a free consultation by clicking the button below.
How to Value a Moving Company Using Multiples
While valuation multiples can provide helpful guidelines, accurately valuing a moving company requires a variety of in-depth assessments. Valuation experts consider the impact of factors like market demand, geographic areas, brand reputation, and more. In addition, weighted averages are generally applied to account for financial fluctuations. See How to Value a Moving Company to learn more about the valuation process.
Rules of Thumb for Moving Companies
SDE, EBITDA, and revenue multiples are considered rule-of-thumb methods. These simplified benchmarks provide fast and easy estimates. However, results can be unreliable since every moving company is different. If you need a defensible business valuation, it is important to work with a certified business appraiser. These professionals take thorough measures to account for all factors that impact value. Reach out to Peak Business Valuation today if you have any questions.
Factors Affecting Moving Company Valuation Multiples
Moving company valuation multiples can fluctuate depending on several factors. Determining these variables can help business owners improve the performance and overall value of their moving company. Below, we highlight a few major factors to consider:
- Commercial Contracts: Companies that serve recurring commercial clients or maintain long-term contracts tend to be more stable, leading to higher multiples.
- Brand Reputation: Online reviews and customer satisfaction can strongly impact a moving company. Positive reputations often correlate with stronger customer loyalty and higher valuation multiples.
- Competition: The moving industry is fragmented and competitive. As such, a moving company’s ability to differentiate from competitors can have a direct influence on its overall performance and valuation.
- Skilled Crew: Retaining skilled moving crews helps avoid damage and other risks. This can increase interest from potential investors and buyers of a moving business.
For more guidance on increasing the value of a moving company, read Value Drivers for Moving Businesses.
Conclusion
Valuation multiples offer a useful reference for estimating a moving company’s fair market value. However, there are many additional factors to consider if you are looking for a precise valuation. Working with a professional business appraiser is the most reliable way to ensure an accurate business valuation. During a moving company valuation, these valuation experts consider the strengths, weaknesses, risks, and growth opportunities of the business. This analysis can provide key insights to help you make informed business decisions.
As a professional business appraiser, Peak Business Valuation frequently helps individuals looking to buy, expand, sell, or secure financing for moving companies. We are here to answer any questions you may have and provide a reliable business valuation. Schedule your free consultation with Peak Business Valuation to get started today!
Read Moving Business Valuations and Valuing a Moving Company for additional resources.
