Valuation Multiples for Jewelry & Watch Wholesaling
Jewelry & watch wholesalers distribute fine jewelry, costume jewelry, watches, clocks, precious metals and metal flatware, precious and semiprecious stones, silverware, and jeweler’s findings. The jewelry & watch wholesale industry relies heavily on the world price of gold and is seeing negative impact on margins as inflation rises. Within the United States, there are over 28,000 jewelry & watch wholesalers. These businesses generate over $62 billion in revenue. During the COVID-19 pandemic, jewelry & watch wholesalers saw an increase in demand as consumers spent more on jewelry as travel became limited. Since then, the industry has stabilized. If you are looking to buy or sell a jewelry & watch wholesaling business, it is important to understand the company’s value. A business valuation determines the value of a jewelry & watch wholesaling business. The valuation process includes using valuation multiples for jewelry & watch wholesaling.
For more information see Valuing a Jewelry & Watch Wholesale Business and How to Value a Jewelry & Watch Wholesale Business. As well as Value Drivers for Jewelry & Watch Wholesale.
Valuing a Jewelry & Watch Wholesaling Business
A valuation analyst considers many factors when determining the value of a jewelry & watch wholesale business. Some of these factors include the world price of gold, distribution channels and costs, and customer demand. The business appraiser will also analyze the jewelry & watch wholesalers financial statements and key value drivers for a jewelry & watch wholesale business. They will then compare these to similar jewelry & watch wholesalers. At Peak Business Valuation, business appraiser, we use a variety of valuation methods to determine the value of a jewelry & watch wholesale business.
Whether you are buying or selling a jewelry & watch wholesale business, it is important to understand the value. A business appraisal will determine the fair market value of a jewelry & watch wholesale business. It will also identify the strengths and weaknesses of the business. If you plan on selling a jewelry & watch wholesale business a business appraisal will help determine a fair listing price. As a business owner, you don’t want to list your business too high and scare away potential buyers. But you also don’t want to list too low and leave money on the table. Obtaining a business valuation for a jewelry & watch wholesale business can help you feel confident in your transaction.
Whereas, if you plan on buying a jewelry & watch wholesale business, a business appraisal can help you understand and negotiate a purchase price. It is also a useful tool for maximizing the value of a jewelry & watch wholesale business.
Peak Business Valuation, business appraiser, values jewelry & watch wholesale businesses across the country. We are happy to answer any questions you have about valuing a jewelry & watch wholesale company. Schedule a free consultation to get started!
Valuation Multiples for Jewelry & Watch Wholesaling
Below we show average valuation multiples for jewelry & watch wholesalers. This includes average REV, SDE, and EBITDA multiples for a jewelry & watch wholesaler. Keep in mind these numbers are only a guide. For specific information about valuing a jewelry & watch wholesale business, schedule a free consultation. Peak Business Valuation, business appraiser, is happy to help!
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 business appraiser commonly uses valuation multiples for jewelry & watch wholesalers when determining the value of a jewelry & watch wholesale business. A valuation multiple is a ratio. It compares two factors. For instance, a common valuation multiple is the SDE multiple. The SDE multiple for a jewelry & watch wholesaler compares the seller’s discretionary earnings with the implied value of the company.
For example, the seller’s discretionary earnings of a jewelry & watch wholesaler are $188,000. When using a 3.07x SDE multiple, the jewelry & watch wholesale business is worth approximately $577,160. ($188,000 times 3.07x) Whereas, if a 3.18x SDE multiple is applicable the implied value of the jewelry & watch wholesale business is $597,840. ($188,000 times 3.18x)
When using valuation multiples for a jewelry & watch wholesaler, a business appraiser at Peak Business Valuation will compare your business to similar jewelry & watch wholesalers. The appraiser will then determine an applicable market multiple for your jewelry & watch wholesale business. Using several valuation approaches they will determine a range of value for the jewelry & watch wholesale business.
Peak Business Valuation provides business appraisals for jewelry & watch wholesale businesses. We love to work with individuals buying or selling a jewelry & watch wholesale business. Get started with your business valuation for a jewelry & watch wholesale business by scheduling a free consultation.
SDE Multiples for a Jewelry & Watch Wholesalers
Average SDE Multiple range: 3.03x – 3.23x
According to Peak’s data, jewelry & watch wholesalers transact between a 3.03x – 3.23x SDE multiple. To calculate the implied value of the jewelry & watch wholesale business, take the seller’s discretionary earnings and multiply it by the applicable SDE multiple. See the calculation below.
SDE X Multiple = Value of the Business
For instance, a jewelry & watch wholesaler makes $290,000 in seller’s discretionary earnings. Using a 3.13x SDE multiple, the implied value of the jewelry & watch wholesaler is approximately $935,870.
$299,000 X 3.13x = $935,870
The seller’s discretionary earnings multiple is common to use when valuing a jewelry & watch wholesaler. This is because it includes common add-backs to the business valuation. These common add-backs can include personal expenses ran through the business, a fair owner’s compensation, and any non-related or non-recurring business expenses. Adding these expenses to the company’s operating profit determines the seller’s discretionary earnings. An SDE multiple is common for small businesses to transact on.
EBITDA Multiples for Jewelry & Watch Wholesalers
Average EBITDA Multiple range: 3.31x – 5.51x
In our data, the average EBITDA multiples for jewelry & watch wholesalers range between 3.31x – 5.51x. To determine the implied value of the jewelry & watch wholesale business, use EBITDA and multiply it by the applicable multiple. The calculation follows.
EBITDA X Multiple = Value of the Business
For example, the EBITDA of a jewelry & watch wholesaler is $226,000. It transacts at a 4.28x EBITDA multiple. Using the above calculation, the jewelry & watch wholesale business is worth approximately $967,280.
$226,00 X 4.28x = $967,280
AN EBITDA multiple measures the return on investment or ROI an investor expects to make from the jewelry & watch wholesale business. The valuation expert will determine if an EBITDA multiple is applicable to your business transaction. Often an EBITDA multiple is preferred as it uses normalized ratios. Normalized ratios enable the business appraiser to compare similar jewelry & watch wholesale business. Normalized ratios can more accurately reflect the future earnings a buyer can expect from the jewelry & watch wholesale business. This is because they normalizes differences in capital structure, taxation, and fixed assets.
REV Multiples for Jewelry & Watch Wholesalers
Average REV Multiple range: 0.27x – 0.86x
Last, according to Peak’s database, average REV multiples for jewelry & watch wholesaler fall between 0.27x – 0.86x of revenue. The revenue multiple is less common to rely on, but for some business transactions is most applicable. To determine the implied value of the jewelry & watch wholesale business, use the most recent 12-month period of revenue and multiply it by the applicable REV multiple. See the calculation below.
Revenue X Multiple = Value of the Business
For instance, a jewelry & watch wholesaler generates $1,500,000 in revenue. Using a 0.65x REV multiple, the implied value of the jewelry & watch wholesale company is $975,000.
$1,500,000 X 0.65x = $975,000
When valuing a jewelry & watch wholesaler, a business appraiser at Peak Business Valuation will determine what valuation multiples for a jewelry & watch wholesale business are most applicable. Often small businesses transact on cash flow multiples – SDE and EBITDA multiples. Cash flow multiples consider expenses that impact the cash flow such as COGS, salaries, and rent, among other expenses.
Summary
When viewing valuation multiples for jewelry & watch wholesalers, understand many factors impact them. The business appraiser at Peak Business Valuation will analyze your company’s operations, financials, and key value drivers. They will also compare your jewelry & watch wholesale business to similar jewelry & watch wholesalers. Using several business valuation methods, they will determine a fair market value for the jewelry & watch wholesale company.
Peak Business Valuation, business appraiser, is happy to help you understand the value of a jewelry & watch wholesale business. Whether you plan on buying a jewelry & watch wholesale business or selling one, it is important to understand the value. We are happy to answer any questions you have about valuing a jewelry & watch wholesale business. A business valuation will determine the valuation multiples for jewelry & watch wholesaling that are applicable to your business. Schedule a free consultation today by clicking the link below.
