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Trends in Business Valuation and Revenue

Business Valuation and Revenue

One of the key factors in determining the value of a business is  revenue. Based on recent trends, here are some statistics on valuations of businesses sold within the past five years:

  • Manufacturing businesses with revenues greater than $10m in revenue sold for 13% higher multiple than those under $10m. Those with revenues over $20m sold for 39% higher multiple than those with revenue less than $20m.
  • Manufacturing businesses with EBITDA greater that $2.5m on average sold for 33% more than those businesses under $2.5m.
  • Distribution businesses with sales greater than $10m sold at a 20% premium than those businesses with revenue less than $10m.
  • Service businesses with revenues greater than $4.9m sold at a 15% premium compared to those greater those below it. Businesses with revenues greater than $10m sold for 28% premium.
  • Service businesses with EBITDA greater than $1m sold for a 28% premium than those businesses with EBITDA under $1m.

What do you think your business is valued at? Do you have an exit strategy in place and will you be ready to sell when that time comes? If you own your own business and don’t have a plan to get out, it’s never too late to start planning.

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