Garage Door Business Valuation & Worth

If you are wondering if you should sell your garage door business, then a garage door valuation is a must. There is nothing you can do that is as simple yet profound when it comes to selling your business. 

How do you value a garage door business? First you need to determine the cash flow, and then investigate the multiples of the cash flow that the prospective buyer is willing to pay. This is certainly not difficult to calculate, but it has far-reaching ramifications.

If you are considering the sale of your business and want to more deeply understand the value of your business, you need to calculate the cash flow and then determine what multiple of the cash flow the buyer is willing to pay. To find the garage door business valuation, you need to find out if 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+

Consider that the cash flow is intricately linked with how long it would take your prospective buyer to pay off the business. Two times the cash flow would take two years, four times the cash flow would take four years, and so on. It stands to reason that a buyer will offer more multiples for a business that is more stable. A larger business is usually more stable because there is a larger customer base, there are many ways to develop revenue, and the geographic reach is larger. With increased cash flow also comes increased multiples.

Along with the cash flow, there are other elements of your business that can affect the bottom line when it comes to a garage door business valuation. These elements might seem like intangibles but are intricately tied to the valuation of a garage door company.

• New Construction (the lower the better – aim for less than 20%)
• Maintenance Contracts (the more contracts the better – 20% increase is strong)
• Growth of the Revenue (number grows each year- 20% increase is strong)
• Reputation Management via Marketing (based on star rating and Google reviews)
• Generation of Leads (sustainable and frequent lead generation desired)
• Technician Crew (the more crew the better, with more than ten being advisable)
• Integration of Technology for Workflow (ServiceTitan or HouseCall Pro is a plus)
• Ability to Work Independently From Owner (Less owner involvement is good. If the owner can step away for a few weeks it is great. )

If you are pondering “How much is my garage door business worth,” simply multiply the free cash flow by the multiples to determine your garage door valuation. There are a few tagalong ideas to consider. When selling your business, understand that the investor will likely want to buy all the materials needed to run the business, such as equipment and vehicles. 

Additionally, buyers require a debt free sale, so you need to take care of any outstanding bill before you sell. Lastly, consider the variety of fees you must pay in order to sell the business. Expect to pay 25-30% of the sale price in fees.