Valuing a Flooring Installation Company
The flooring installation industry is heavily dependent on the construction industry. As the residential construction increases, demand for flooring installation also increases. This includes building new developments as well as renovations on currently owned properties. The Covid-19 pandemic hugely impacted the construction industry. It reduced the demand for commercial builds. Commercial flooring installation was the second-largest market segment in the industry before the pandemic. This forced a shift of focus to residential construction. In addition, interest rates dropped for mortgages increasing consumer demand for residential construction. Hence, now may be a good time to consider buying or selling a flooring installation business. Whether you are planning to sell or buy, it is important to understand the process of valuing a flooring installation company.
Valuing a Flooring Installation Business
There are countless factors that impact the value of a flooring installation business. As a business appraiser, Peak Business Valuation works with dozens of individuals who are selling or buying a flooring installation business. The first step in either of those processes is obtaining a business valuation. Part of the valuation engagement includes discussing key factors a valuation expert uses when valuing a flooring business. Keep in mind the factors below are only a guide. For more specific information about valuing a flooring business you are buying or selling, schedule a free consultation with Peak Business Valuation, business appraiser.
Market Multiples for a Flooring Installation Business
- REV Multiple Average: 0.29x – 0.51x
- SDE Multiple Average: 1.62x – 2.88x
- EBITDA Multiple Average: 3.39x – 3.97x
**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.
By increasing your understanding of what your flooring installation business is worth, you can take steps to increase the value of your business. This is important whether you expand your business, acquire a new business, or want to grow the value of your current business before selling. Here are some ideas to help increase the value of your flooring business. If you would like specific information on your business, schedule a free consultation with Peak Business Valuation, business appraiser.
Key Success Factors
Peak Business Valuation, business appraiser, values flooring installation businesses around the country. Below are a few success factors that can help distinguish your business. They are also key to maximizing the value of a flooring installation business. For additional information take a look at Value Drivers for Flooring Installers, How to Value a Flooring Company, as well as Valuation Multiples for a Flooring Business.
Product and Service Mix
Flooring is necessary for every building whether commercial or residential. Flooring installation includes many types of products. This can include tile, wood, laminate, carpet, etc… With the recent pandemic, we have seen a decline in commercial construction and a rise in the residential industry. Companies are forced to adapt to outside influences and modify their business models. Doing so can impact the value of your business. Peak Business Valuation, business appraiser, will help compare your business model’s product and service mix to averages in the flooring installation industry.
Skilled Team
Next, having a trained team is one of the most important factors to having a successful business. Flooring installation requires trained individuals with experience. This is important for increased customer satisfaction and repeat business. Most construction companies contract out this type of work. Having a reputable team will work to your benefit when landing construction contracts. Whereas if work is poorly done, you will not gain important contracts such as big contracts for housing developments. A skilled team is a very important success factor and key to maximizing the value of your business. A valuation expert will look at the level of expertise on your team and whether the team is able to manage independently of the owner.
Recurring Revenue
Last, a huge success factor for this industry is gaining recurring revenue. This can be done by creating reputable relationships with builders or other types of contractors. Oftentimes, a builder will partner with other contractors who do different pieces of work a house or commercial building might need. Flooring installation is no different. Creating a good reputation for yourself is a great way to bring in recurring revenue. Recurring revenue decreases time spent marketing yourself to potential new clients or even trying to get your name out there.
Our Peak professionals will take into account the amount of recurring revenue occurring in your profits. For more information read, Growing Your Business Through Recurring Revenue. For specific questions about how to increase value, feel free to reach out to Peak Business Valuation, business appraiser.
Summary
A valuation expert considers many factors when valuing a flooring installation business. Understanding the value is important whether you are trying to grow your business, buy, or even sell a flooring installation company. Obtaining a business valuation will help you understand the fair market value of a flooring business. A business appraisal will also uncover ways to increase the value of your flooring installation business.
Peak Business Valuation, business appraiser, values flooring installation companies across the country. For more information, schedule your free consultation below. We look forward to hearing from you!
