Tour guide businesses provide sightseeing, cultural, and outdoor experiences for travelers across the world. With growing emphasis on travel, running a tour guide business can be extremely lucrative. If you are looking to buy, grow, or sell a tour guide business, receiving a business valuation is a helpful first step. It provides insight into the company’s worth, risks, and opportunities. With these insights, you can make informed decisions and plan effectively. For a quick and easy value estimate, many people turn to valuation multiples for a tour guide business. In this article, we discuss what multiples are and how to use them when valuing a travel agency. We also outline the common tour guide business valuation multiples.
Peak Business Valuation frequently works with individuals who are buying, growing, or selling tour guide businesses. We are happy to help you with a credible tour guide business valuation. In addition, we can answer any questions you have about valuation multiples for a tour guide business. Schedule a free consultation with Peak Business Valuation below to get started!
Valuing a Tour Guide Business
When valuing a tour guide business, business appraisers often apply multiple valuation methodologies. One of the most common approaches is the market approach. This technique uses valuation multiples to compare similar tour guide businesses that have recently sold on the open market. In addition, business appraisers account for the risks and value drivers for a tour guide business to get a more credible estimate. You can use this insight to make informed decisions and increase the value of a tour guide business.
Valuation Multiples for Tour Guide Businesses
Peak’s data below shows the typical range of valuation multiples for a tour guide business. Business appraisers calculate these figures from real transactions involving comparable companies, most often using SDE, EBITDA, or revenue as the underlying metric.
Disclaimer: These multiples are for educational purposes only. As such, the information provided does not constitute valuation advice. These multiples do not represent the valuation opinion of Peak Business Valuation or its valuation professionals. Instead, seek the guidance and advice of a qualified business valuation professional about any matter in this article.
What is a Valuation Multiple?
A valuation multiple is a ratio that compares a company’s sale price to a metric, such as its cash flow or revenue. Business appraisers derive these ratios from transaction data involving similar companies. Applying an appropriate multiple to a tour guide business’s financials gives owners and buyers a starting estimate of value. In the sections below, we break down the three most common valuation multiples for a tour guide business. See What is a Valuation Multiple to learn more.
SDE Multiples for a Tour Guide Business
Average SDE Multiple Range: 2.06x – 3.43x
Peak’s data indicates that tour guide businesses sell within an SDE multiple range of 2.06x to 3.43x. Valuation experts can calculate a company’s value using the following formula:
SDE × Multiple = Business Value
For instance, if a tour guide business generates $190,000 in SDE and sells at a 2.70x multiple, its estimated value would be $513,000.
$190,000 × 2.70x = $513,000
To arrive at SDE, valuation analysts add back the owner’s salary, personal expenses, and other discretionary or non-recurring costs to the company’s net income. This adjustment reflects the true cash flow available to a new owner of a tour guide business. Read Understanding Seller’s Discretionary Earnings to learn more about this figure.
If you want to know what your tour guide business may be worth, Peak Business Valuation can help. We can answer any questions about valuation multiples for a tour guide business. Schedule your free consultation with Peak Business Valuation to get started valuing a travel agency.
EBITDA Multiples for a Tour Guide Business
Average EBITDA Multiple Range: 2.51x – 4.83x
Tour guide businesses with a stronger infrastructure and a large client base often transact at EBITDA multiples between 2.51x and 4.83x. The formula is as follows:
EBITDA × Multiple = Business Value
Say a tour guide business earns $230,000 in EBITDA and sells at a 3.60x multiple. In this case, its estimated value is $828,000:
$230,000 × 3.60x = $828,000
Because EBITDA removes financing and accounting decisions, it gives buyers a clear way to compare tour guide businesses of different sizes and ownership structures. This multiple is often favored for larger operators with multiple guides, vehicles, or tour packages already established.
Revenue Multiples for a Tour Guide Business
Average Revenue Multiple Range: 0.40x – 1.14x
Revenue multiples for a tour guide business typically fall between 0.40x and 1.14x. This wide range reflects how much seasonality and booking volume can vary from one operator to the next. The formula is as follows:
Revenue × Multiple = Business Value
If a tour guide business brings in $650,000 in annual revenue and transacts at a 0.75x multiple, its estimated value would be $487,500:
$650,000 × 0.75x = $487,500
Because revenue does not account for profitability, Peak Business Valuation often weighs it less heavily than SDE or EBITDA. However, this metric can offer a useful check for tour guide businesses with strong repeat bookings. Business appraisers determine which multiple is most applicable to the specifics of your tour guide business.
Summary
Valuation multiples for a tour guide business offer a useful preliminary estimate of the business’s worth. SDE, EBITDA, and revenue multiples each measure a company’s value from a different perspective. As such, business appraisers often use them together for a more complete view. Please note that multiples cannot account for everything that impacts the value of an individual tour guide business. If you need a credible business valuation, it is best to work with a professional business appraiser.
Peak Business Valuation is a trusted appraisal firm that supports individuals looking to buy, grow, or sell tour guide businesses. We can provide you with a reliable tour guide business valuation and answer any questions you may have. Schedule your free consultation with Peak Business Valuation below to get started valuing a tour guide business!
