Appliance Service Business Valuation & Worth

When you are debating with yourself about whether or not it is a good idea to sell your appliance repair service business, taking the time to fully understand your appliance repair service valuation is extremely important. 

When you ask yourself “How much is my appliance repair service business worth,” your answer is only dependent on two things. 

The first is how much cash flow your business has at the ready, and the second is the multiples of the cash flow that people will pay to buy your business.

How to value an appliance repair service company all comes down to cash flow, and the way you calculate multiples based on that. You need to find out what multiple of the cash flow the buyer is willing to pay. With an appliance repair service valuation, the buyer will pay two times, four times, six times, etc. of the given cash flow.

• Under $500k free cash flow – 2x-4x / Valuation range $500k – $2m
• $500k-$1m free cash flow – 3x-5x / Valuation range $1.5m – $5m
• $1m-$2.5m free cash flow – 4x-6x / Valuation range $4m – $15m
• $2.5-$10m free cash flow – 6x-10x / Valuation range $15m – $100m
• $10m-$25m free cash flow- 10x-20x / Valuation range $100m – $250m
• $25m+ free cash flow – 25x+ / Valuation range $600m+

When you consider cash flow, it is intricately linked to how long it will take to pay off the purchase price of the business. If the buyer pays two times the cash flow, it will take two years, four times the cash flow four years, and so on. In order to sell, you need to understand this scenario.

And the multiples game is even more important. If your business is stable with a stronger customer base and varied revenue streams, you would have more cash flow and an increased multiple.

SECONDARY IMPLICATIONS

Besides just the cash flow and add-backs, there are other intricacies that can affect the sale of your business.

• New company construction (Aim for 20%, and lower is stellar)
• Important maintenance contracts (Aim for 20%, and higher is stellar)
• Revenue growth (Aim for more than 20%, and higher year by year)
• Reputation management (number of Google reviews and average star rating)
• Creation of marketing leads (consistent and repeatable lead generation flow is stellar)
• A longstanding technician crew (more technicians is better – aim for 10)
• Workflow technology used in company (ServiceTitan or HouseCall Pro is great)
• If business can run without the owner constantly around (Aim for the owner being able to leave on vacation and turn the phone off, and less day-to-day involvement is better.)

So, how much is my Appliance Repair Service worth?

If you are still wondering “How much is my appliance repair service business worth?” do not fret. Multiply the free cash flow by the multiples to determine your appliance repair service valuation. 

In addition to the ease with which you can determine the multiples, there are several other important factors inherent in selling your business. You might be astounded by the large sale number, but understand that fees and taxes will eat a large portion and you will generally get 70-80% of the asking price.

Generally, a business is sold with all trucks and equipment that make it run, so consider that when you go to sell. The business also must be sold debt free, which puts you as the person in charge of clearing all debts before it exchanges hands. The buyer and seller will also agree upon an amount of capital left in the business before the sale.