Valuation Multiples for an Interior Design Business
The interior design industry helps clients create unique, functional, and aesthetically pleasing environments. With the growing demand for interior design services, we can expect the industry to generate billions in 2025. As such, running an interior design business can be very rewarding. If you want to buy, grow, or sell an interior design business, consider obtaining a business valuation. As part of a business valuation, a business appraiser uses valuation multiples for an interior design business to calculate its current value. In addition, you will learn about the business’s market position, growth potential, and strengths and weaknesses. This information can help you make strategic decisions to achieve your goals
In this article, We discuss common valuation multiples for interior design businesses. It is important to note that the valuation multiples we highlight are only averages. For tailored insights, It is best to obtain a professional business valuation for an interior design business.
Peak Business Valuation Is a professional business appraiser that works with clients looking to buy, grow, or sell interior design businesses. We are happy to help you with an interior design business valuation! In addition, we can answer any questions you may have on valuation multiples for an interior design business. Get started today by scheduling your free consultation with Peak Business Valuation below!
Valuing an Interior Design Business
When valuing an interior design business, Valuation experts at Peak often rely on the market approach. This valuation method incorporates valuation multiples to estimate the company’s fair market value. Below, we discuss the most common valuation multiples for an interior design business. For additional details, refer to Valuing a Small Business or contact Peak Business Valuation!
Valuation Multiples for Interior Design Businesses
The following image shows the average range of valuation multiples for an interior design business. To determine which multiples are most applicable to your business, it is essential to obtain an interior design business valuation. Peak Business Valuation is happy to help! Schedule your free consultation to get started.
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 valuation analysts use to calculate the value of a business. The multiple compares an interior design business’s value to financial metrics such as revenue, cash flow, or earnings. This provides a strong foundation for estimating the fair market value of an interior design business.
For instance, Seller’s Discretionary Earnings (SDE) multiples are a common approach. Suppose an interior design business has $280,000 in seller’s discretionary earnings. If the company is valued at a 1.45x multiple, it would be worth $406,000 ($280,000 times 1.45x). Contrarily, if the business receives a 2.80x multiple, its estimated value would be $784,000 ($280,000 times 2.80x).
At Peak Business Valuation, we are experienced in valuing interior design businesses using valuation multiples. The following sections examine SDE, EBITDA, and REV (revenue) multiples for interior design businesses. Keep in mind that the multiple an expert uses will depend on your business’s financial characteristics.
SDE Multiples for an Interior Design Business
Average SDE Multiple Range: 2.27x – 2.68x
Interior design businesses often transact at SDE multiples ranging from 2.27x to 2.68x. Business appraisers can calculate the interior design business’s fair market value by applying the multiple to the owner’s discretionary earnings (SDE). The calculation is as follows:
SDE X Multiple = Business Value
For example, if an interior design business generates $315,000 in SDE and transacts at a 2.40x multiple, its approximate value would be $756,000:
$315,000 X 2.40x = $756,000
Calculating SDE involves adjusting the operating profit to reflect the business’s actual cash flow potential. Adjustments typically include adding back non-recurring expenses, personal expenses, and owner compensation. This helps the valuation expert better understand the interior design business’s profitability. For more details, see Understanding Seller’s Discretionary Earnings.
As a professional business appraiser, Peak Business Valuation works with interior design businesses throughout the nation. We are here to provide you with an accurate interior design business valuation! Additionally, Peak Business Valuation can answer any questions on valuation multiples for an interior design business. Schedule a free consultation with Peak Business Valuation today!
EBITDA Multiples for Interior Design Businesses
Average EBITDA Multiple Range: 3.05x – 3.75x
Next, interior design businesses transact at an average EBITDA multiple range of 3.05x To 3.75x. Valuation experts can apply the multiple to the interior design company’s EBITDA To calculate its value. See the equation below.
EBITDA X Multiple = Business Value
If an interior design business generates $240,000 in EBITDA and transacts at a 3.35x multiple, then it is worth approximately $804,000.
$240,000 X 3.35x = $804,000
Valuation experts use EBITDA multiples to calculate an interior design business’s return on investment (ROI). This multiple is also useful for comparing the financial performance of similar businesses on the market.
Revenue Multiples for Interior Design Businesses
Average Revenue Multiple Range: 0.37x – 0.81x
Lastly, Peak’s data shows that interior design businesses generally sell at revenue multiples ranging from 0.37x to 0.81x. Peak will calculate the interior design business’s value using the following equation:
Revenue X Multiple = Business Value
For instance, if an interior design business generates $1,650,000 in revenue and sells at a 0.60x multiple, the estimated value is $990,000:
$1,650,000 X 0.60x = $990,000
Revenue multiples provide useful insight into an interior design business’s total sales. However, Peak Business Valuation prefers cash flow multiples like SDE or EBITDA multiples. A business appraiser will determine the most appropriate multiple for your interior design business as part of the valuation process. Check out The Valuation Process to learn more.
Summary
If you want to buy, grow, or sell an interior design business, a business valuation is vital. When valuing an interior design business, the valuation expert may use valuation multiples to accurately calculate the business’s fair market value. They will assess the key value drivers for an interior design business as well as the risks that may impact it. This assessment enables business owners to take the next steps in maximizing the value of an interior design business
Peak Business Valuation, professional business appraiser, values interior design businesses across the nation. We are here to provide you with an interior design business valuation and answer any questions on multiples for an interior design business! Start today by scheduling your free consultation with Peak Business Valuation below!
