Shoe and Footwear Manufacturing Valuation Multiples
If you are buying, expanding, selling, or seeking financing for a shoe and footwear manufacturing business, understanding its value is essential. One of the most common ways for valuing a business is by applying valuation multiples. However, determining accurate shoe and footwear manufacturing valuation multiples requires an analysis of various elements. For reliable results, it is important to work with an experienced business appraiser. These professionals can provide precise insights to help you make informed decisions for your business.
In this article, we examine the most common valuation multiples for shoe and footwear manufacturing businesses. Keep in mind that the figures discussed below represent industry averages and may not be applicable to every business. For an accurate valuation, connect with a reputable business appraiser.
Peak Business Valuation is a business appraiser that frequently works with shoe and footwear manufacturing businesses. We can provide an accurate manufacturing business valuation and discuss any questions you have about shoe and footwear manufacturing multiples.
What Are Shoe and Footwear Manufacturing Valuation Multiples?
Valuation multiples are financial ratios that help determine the fair market value of a shoe and footwear manufacturing business. These ratios offer insights into what potential buyers might be willing to pay for a business. Shoe and footwear manufacturing business valuation multiples are often based on seller’s discretionary earnings (SDE), EBITDA, and revenue. A valuation expert will analyze several factors to determine which multiples are most applicable for your manufacturer.
Common Shoe and Footwear Manufacturing Multiples
Below, we outline SDE, EBITDA, and revenue multiples for a shoe and footwear manufacturer. While these figures can provide useful estimates, they should not replace a professional valuation. To learn more, refer to Shoe and Footwear Manufacturing Business Valuations.
SDE Multiples for a Shoe and Footwear Manufacturing Business
SDE multiples determine a shoe and footwear manufacturing company’s value relative to its seller’s discretionary earnings (SDE). To calculate SDE, the business appraiser adjusts net earnings to account for owner compensation, discretionary expenses, and one-time costs. The level of owner involvement also impacts the selected SDE multiple. SDE multiples are helpful when assessing a manufacturer’s profitability.
Formula: Value = SDE × Multiple
Range: SDE multiples for shoe and footwear manufacturing businesses typically range from 2.59x to 3.30x SDE.
Shoe and Footwear Manufacturing EBITDA Multiples
EBITDA multiples value a shoe and footwear manufacturing company based on its earnings before interest, taxes, depreciation, and amortization. These multiples help determine a company’s return on investment (ROI) and overall financial performance. Larger footwear manufacturers often benefit from EBITDA multiples, as they allow straightforward comparisons with similar businesses.
Formula: Value = EBITDA × Multiple
Range: EBITDA multiples for shoe and footwear manufacturing businesses can range from 4.08x to 4.76x EBITDA.
Revenue Multiples for a Shoe and Footwear Manufacturing Business
Revenue multiples calculate a footwear manufacturer’s value based on its past 12 months of revenue. While this multiple can offer a general estimate, it does not account for profitability or operational efficiency. These are key contributors to a shoe and footwear manufacturer’s value. To provide a reliable valuation, Peak Business Valuation often relies on cash flow-based multiples such as SDE and EBITDA. In addition, we use a combination of methods and multiples to consider all factors.
Formula: Value = Revenue × Multiple
Range: On average, revenue multiples for shoe and footwear manufacturing businesses range from 0.62x to 0.76x revenue.
Peak Business Valuation values shoe and footwear manufacturing businesses across the country. If you need a professional manufacturing business valuation, schedule a free consultation with Peak today!
How to Value a Shoe and Footwear Manufacturing Business Using Multiples
Using the above valuation multiples can provide a general estimate of a shoe and footwear manufacturing business’s value. However, selecting the most suitable multiples requires professional expertise. For example, SDE multiples are more relevant for small, owner-operated businesses, while EBITDA multiples are commonly used for larger footwear manufacturers. These are critical factors to consider when identifying shoe and footwear manufacturing valuation multiples.
For more insights, check out How to Value a Shoe and Footwear Manufacturing Business.
Factors Affecting Manufacturing Valuation Multiples
There are several factors that influence shoe and footwear manufacturing multiples. Understanding these value drivers can help business owners develop a strategy to enhance their manufacturing business. Below, we highlight some of the most critical factors for shoe and footwear manufacturers:
- Production Efficiency: Footwear manufacturers with optimized production processes and cost-effective operations often yield strong profit margins, promoting higher valuation multiples.
- Brand Strength & Customer Loyalty: Shoe and footwear manufacturers with a strong brand and customer loyalty are often more stable. This has a major impact on a shoe and footwear manufacturing business’s value.
- Supply Chain Stability: Having consistent access to high-quality materials at competitive prices is crucial for footwear manufacturers. Businesses with strong supplier relationships tend to receive more favorable multiples.
- Product Innovation & Design: Footwear companies that keep up with changing consumer preferences often attract more customers and higher valuation multiples.
See Value Drivers for a Shoe and Footwear Manufacturer for more information.
Conclusion
Valuation multiples are useful for estimating the value of a shoe and footwear manufacturing business. However, these financial ratios do not account for all factors that affect a shoe and footwear manufacturer’s value. For the most reliable valuation, consider working with a professional business appraiser. An appraiser conducts various analyses to provide insights into a footwear manufacturer’s financial performance, industry trends, growth potential, risks, and advantages as part of a manufacturing business valuation. This helps business owners make informed decisions to maximize the value of their shoe and footwear manufacturing business.
As a professional business appraiser, Peak Business Valuation specializes in valuing shoe and footwear manufacturing businesses. We are here to provide you with a business valuation for a shoe and footwear manufacturing business! Additionally, we can discuss any questions you may have about the valuation process. Get started today by scheduling a free consultation below!
For more guidance, read Shoe and Footwear Manufacturing Business Valuations or How to Value a Shoe and Footwear Manufacturing Business.
