Valuation Multiples for a Personal Care Service Business
Personal care service businesses provide specialized health and wellness services to improve the quality of life for geriatric and disabled individuals. Operating a personal care service business allows you to make a meaningful impact. In addition, it can be very lucrative. Whether you are looking to buy, grow, or sell a personal care service business, obtaining a business valuation for a personal care service business is important. As part of a business valuation, a business appraiser uses valuation multiples for a personal care service business. Understanding multiples can give you a better view of the fair market value of a personal care service business.
In this article, we highlight some of the most common valuation multiples for assessing the value of a personal care service business. Keep in mind that the figures we share are averages. For specific and accurate guidance, it is best to receive a business valuation for a personal care service business.
As a professional business appraiser, Peak Business Valuation works with individuals looking to buy, grow, or sell a personal care business. We can offer you a personal care service business valuation. If you have any questions on the value of a personal care service business or personal care service valuation multiples, schedule a free consultation with Peak Business Valuation today!
Valuing a Personal Care Service Business
When performing a business valuation for a personal care service business, business appraisers often rely on the market approach. This method uses multiples to estimate a personal care service business’s fair market value based on the current market. Below, we explore some common valuation multiples to value personal care service businesses. For more information, see Value Drivers for a Personal Care Service Company. If you have any questions, reach out to Peak!
Valuation Multiples for Personal Care Service Businesses
The image below provides an overview of the average valuation multiples for personal care service businesses. To determine which multiples apply to your specific business, consider obtaining a business valuation. Peak Business Valuation is here to provide a professional business valuation and answer any questions you have. Start by scheduling a free consultation with Peak Business Valuation!
Disclaimer: These multiples are for educational purposes only. The information provided does not constitute professional advice. The multiples shared here do not represent the valuation opinion of Peak Business Valuation or its professionals. We recommend consulting a qualified business valuation expert for any valuation-related decisions.
What is a Valuation Multiple?
Valuation multiples are essential tools when determining the fair market value of a personal care service business. These multiples measure the business’s value in relation to key financial metrics such as earnings, cash flow, and sales. For example, a common multiple is the seller’s discretionary earnings (SDE) multiple.
Suppose a personal care service business has $265,000 in SDE and is valued at a 2.45x multiple. In this case, the implied business value would be $649,250 ($265,000 times 2.45x). Whereas, if the business tracts at a 3.05x, the company’s estimated value would be $808,250 ($265,000 times 3.05x).
At Peak Business Valuation, business appraisers regularly work with valuation multiples for personal care service businesses. The following sections discuss SDE, EBITDA, and REV multiples. Please note that the range of value may vary since each personal care service business is unique.
SDE Multiples for a Personal Care Service Business
Average SDE Multiple Range: 2.46x – 3.08x
Based on Peak Business Valuation’s research, personal care service businesses tend to transact at an SDE multiple between 2.46x and 3.08x. Business appraisers use this multiple to estimate the fair market value of a personal care service business. The formula is as follows:
SDE X Multiple = Value of the Business
For instance, if a personal care service business generates $270,000 in SDE and transacts at a 2.65x multiple, the approximate value would be $715,500.
$270,000 X 2.65x = $715,500
At Peak Business Valuation, we often use SDE multiples when valuing a personal care service business. To calculate SDE, a business appraiser adjusts the operating profit by adding back discretionary or non-recurring expenses. This process helps clarify the personal care service business’s actual earning potential. For more details, check out Understanding Seller’s Discretionary Earnings.
EBITDA Multiples for Personal Care Service Businesses
Average EBITDA Multiple Range: 3.38x – 3.96x
On average, personal care service businesses transact at an EBITDA multiple between 3.38x and 3.96x. This multiple is applied to the business’s EBITDA to estimate its value:
EBITDA X Multiple = Value of the Business
For example, a personal care service business generating $220,000 in EBITDA might be worth $765,600 if valued at a 3.48x multiple.
$220,000 X 3.48x = $765,600
EBITDA multiples are useful for determining a personal care service business’s return on investment (ROI). Valuation analysts at Peak Business Valuation may use EBITDA multiples since they standardize financial metrics making it easier to compare other personal care service businesses in the industry.
REV Multiples for a Personal Care Service Business
Average REV Multiple Range: 0.42x – 0.84x
Finally, personal care service businesses typically transact at a revenue multiple between 0.42x and 0.84x. Valuation experts use this multiple to estimate the value of a personal care service business by multiplying revenue by the applicable multiple:
Revenue X Multiple = Value of the Business
For instance, if a personal care service business generates $1,450,000 in revenue and transacts at a 0.62x multiple, it would be worth about $899,000.
$1,450,000 X 0.62x = $899,000
While revenue multiples are commonly used, they tend to be less reliable than cash flow multiples like SDE and EBITDA. During the valuation process, business appraisers will assess which multiples are most suitable for your personal care service business. For more information, see The Valuation Process.
Summary
Obtaining a business valuation is pivotal if you are buying, expanding, or selling a personal care service business. A personal care service business valuation can give you crucial insights into your business’s value. You can leverage this information to make strategic decisions and maximize the business’s value.
At Peak Business Valuation, we work with personal care service businesses across the United States. We are happy to help you with a professional personal care business valuation and answer any questions about valuation multiples for a personal care service business. Start today by scheduling a free consultation with Peak Business Valuation below!
