Service

Selling a Service Business

If you are considering selling a service business, Viking M&A’s comprehensive brokerage and advisory services are here to expertly guide you through the process.

When selling a service business, understanding its true market value is paramount. With our extensive experience working with service businesses, we can thoroughly and accurately assess your company’s value. We recognize that each service business comes with its unique considerations. Whether you offer professional consulting services, IT solutions, mechanical services, or specialized healthcare services, we will work closely with you to identify your objectives and priorities. Our goal is to connect you with motivated buyers and assist you in achieving the best possible outcome, all while maximizing the value of your business through our tailored business brokerage solutions.

Valuation Considerations in the Service Industry

The valuation multiples for the service industry can vary depending on the specific industry, the size of the company, and other factors. One method is the EBITDA multiple, which calculates a company’s value based on its earnings before interest, taxes, depreciation, and amortization. So, for example, if service businesses are currently selling for between 1.5 and 3.0 times their EBITDA, that means a small service company with $1 million in EBITDA might sell for $1.5 million to $3 million. A larger service company with $10 million in EBITDA might sell for $15 million to $30 million.

The specific valuation multiple that a service company receives will depend on a number of factors, including:

• The industry the company operates in. Some industries, such as consulting and IT services, tend to command higher valuation multiples than others, such as cleaning and janitorial services.
• The size of the company. Larger companies typically sell for higher valuation multiples than smaller companies.
• The company’s growth prospects. Companies with strong growth prospects will typically command higher valuation multiples than companies with slower growth.
• The company’s profitability. More profitable companies will typically command higher valuation multiples than less profitable companies.
• The company’s financial strength. Companies with strong financials will typically command higher valuation multiples than companies with weaker financials.
  

It is important to note that these are general guidelines. The actual valuation multiple that a service company receives will depend on the specific circumstances of the sale.
Here are some additional factors that can affect the valuation multiple of a service company:

• The presence of recurring revenue. Recurring revenue is more valuable than non-recurring revenue, as it is more predictable and sustainable.
• The strength of the company’s management team. A strong management team can increase the value of a service company by improving its operations and growth prospects.
• The company’s intellectual property. Intellectual property, such as patents and trademarks, can add value to a service company.
• The company’s market share. A larger market share can increase the value of a service company by giving it more bargaining power with customers and suppliers.

At Viking Mergers and Acquisitions, our advisory approach prioritizes our client’s best interests. We leverage our industry knowledge to ensure favorable outcomes and facilitate smooth transitions for all parties involved. We are committed to assisting you through the entire process of selling a service business, from the initial valuation to the post-closing transition. We’ve built our approach to mergers and acquisitions on transparency, integrity, and customer satisfaction. Contact us today to explore how we can help you achieve your goals.

For potential buyers exploring service businesses for sale, we specialize in guiding entrepreneurs through the process, matching sellers to suitable buyers. The service industry offers diverse opportunities, from consulting firms to healthcare providers, so we focus on providing the information and insight needed to make well-informed decisions throughout the acquisition process. Contact us for more information about service businesses for sale or sign up for our buyers email list.