Valuation Multiples for a Candy Store
The candy retail industry attracts a wide variety of customers looking to satisfy their sweet tooth. Businesses in this industry benefit from consistent demand and consistent market trends. Whether you plan to buy, grow, or sell a candy store, obtaining a business valuation is a pivotal step. As part of a candy store valuation, a business appraiser often uses valuation multiples for a candy store. This enables them to accurately determine the store’s fair market value. In addition, you will learn about the candy store’s growth potential, strengths, and weaknesses. With this information, you can identify opportunities to maximize the value of a candy store.
In this article, we highlight the most common valuation multiples for candy stores. It is important to note that the figures we discuss are just averages. For more applicable insights, obtain a professional candy store valuation.
As a professional business appraiser, Peak Business Valuation is happy to help! Whether you are buying, growing, or selling a candy store, we can provide you with an accurate business valuation. Peak can also address any questions about valuation multiples for a candy store. Get started by scheduling a free consultation with Peak Business Valuation below!
Valuing a Candy Store
Business appraisers commonly use the market approach when valuing a candy store. This method estimates a candy store’s fair market value by assessing similar stores that recently sold on the market. This typically involves the use of valuation multiples. Below, we highlight some of the most common valuation multiples for a candy store. For more insights on valuing a candy store, see How to Value a Small Business.
Valuation Multiples for Candy Stores
The table below outlines average valuation multiples for candy stores. For more specific guidance, it is important to consult a professional business appraiser. At Peak Business Valuation, we are happy to help you with a candy store valuation and answer any questions you may have. Schedule a free consultation with Peak today!
Disclaimer: These multiples are provided for educational purposes only. The information shared does not constitute professional advice, nor do these figures represent the valuation opinion of Peak Business Valuation or its experts. For personalized advice, we recommend consulting a qualified business valuation professional.
What is a Valuation Multiple?
Valuation multiples are financial ratios that compare a candy store’s value to key financial metrics such as earnings, revenue, or cash flow. One of the most common candy store valuation multiples is the seller’s discretionary earnings (SDE) multiple.
Suppose a candy store has $235,000 in SDE and a 1.78x multiple is applied, the value of the business would be $418,300 ($235,000 times 1.78). In contrast, if the store transacts at an SDE multiple of 3.92x, the estimated value would increase to $921,200 ($235,000 times 3.92).
Peak Business Valuation regularly works with valuation multiples as part of the valuation process. In the following sections, we explore SDE, EBITDA, and revenue (REV) multiples for candy stores. Keep in mind, the figures provided may not be applicable to your candy store. If you want tailored guidance, receive a candy store valuation.
SDE Multiples for a Candy Store
Average SDE Multiple Range: 2.72x – 2.97x
According to Peak’s data, candy stores generally transact within an SDE multiple range of 2.72x to 2.97x. This multiple helps valuation experts determine the fair market value of a candy store. To do so, they apply the following equation:
SDE x Multiple = Business Value
For example, if a candy store generates $250,000 in SDE and transacts at a 2.85x multiple, it would have an estimated value of $712,500:
$250,000 x 2.85 = $712,500
Business appraisers adjust the operating profit by adding back one-time or discretionary expenses to calculate SDE. This provides a more accurate measure of the candy store’s earning potential. For additional details, see our article on Understanding Seller’s Discretionary Earnings.
Peak Business Valuation is a professional business appraiser that regularly works with candy store valuation multiples. We are here to assist you with a business valuation for a candy store! Peak can also answer your questions on valuation multiples for a candy store. Schedule your free consultation with Peak to get started!
EBITDA Multiples for a Candy Store
Average EBITDA Multiple Range: 3.52x – 4.13x
Next, candy stores may transact at EBITDA multiples ranging from 3.52x to 4.13x. The formula is as follows:
EBITDA x Multiple = Business Value
For instance, assume a candy store generates $190,000 in EBITDA. If it transacts at a 3.85x multiple, the store would be worth $731,500:
$190,000 x 3.85 = $731,500
EBITDA multiples are useful for measuring a candy store’s return on investment (ROI). These multiples can also help compare the financial performance of similar candy stores on the market.
REV Multiples for a Candy Store
Average REV Multiple Range: 0.36x – 0.68x
Lastly, candy stores often transact at a revenue multiple between 0.36x and 0.68x. Business appraisers apply this metric by multiplying a candy store’s revenue by the REV multiple:
Revenue x Multiple = Business Value
If a candy store generates $1,630,000 in revenue and transacts at a 0.53x multiple, its estimated value would be $863,900.
$1,630,000 x 0.53 = $863,900
Revenue multiples are helpful in different scenarios. However, these valuation multiples are typically less reliable than cash flow multiples like SDE or EBITDA. Valuation experts will determine the best valuation multiple for your candy store as part of the valuation process. See The Valuation Process for more information.
Summary
If you are buying, growing, or selling a candy store, a professional valuation is a critical step. Business appraisers will calculate a candy store’s fair market value using valuation multiples and other valuation methods. In addition, the valuation process provides insights into a candy store’s financial standing, market position, and growth potential. This data can help you maximize the value of a candy store.
Peak Business Valuation, business appraiser, Works with candy stores throughout the United States. We are happy to help you with a business valuation for a candy store! Peak can also answer any questions about valuation of multiples for a candy store. Schedule a free consultation with Peak Business Valuation today!
