Financial Services Business Valuation Benchmarks

Business owners and prospective buyers rely on a diverse set of financial benchmarks to assess the value of a business. We have compiled data from current BizBuySell listings and sold businesses to provide insight into the business-for-sale market and important benchmarks for pricing and evaluating financial services businesses relative to industry standards.

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Highlights of Financial Service Businesses Sold on BizBuySell

Financial services businesses listed and sold on BizBuySell include CPA firms, wealth management and financial planning companies, banking and lending businesses, check cashing businesses, insurance agencies, and similar finance-focused service businesses.

Financial Service Business Transaction Trends

Financial service business values had been growing consistently from 2020 through 2023, before falling 23% in 2024. The drop in median sale prices was driven by a combination of lower average revenue and earnings, and a dip in average valuation multiples.

Financial Service Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of revenue and earnings. They represent the sales price of a business relative to its financial performance, and given enough individual business sales data, they represent what the market is willing to pay for a business given its revenue and earnings.

Valuation Trends

Business values and associated multiples fluctuate over time, influenced by a variety of macroeconomic factors such as interest rates, inflation, consumer spending, and overall economic growth.

Average valuation multiples of financial service businesses sold had been rising modestly from 2020 through 2023, before dropping slightly in 2024, largely due to a rise in smaller volume businesses entering the market, and ongoing pressure from elevated interest rates.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner’s discretionary earnings or "cash flow". Arguably the most important valuation metric - as seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - business valuations tend to hinge on the earnings multiple.

Revenue Multiples

Revenue multiples represent the value of a business relative to its overall sales or revenue. In conjunction with an earnings analysis, revenue multiples are commonly used to value a business based on its overall sales.

How to Interpret These Multiples

Recent Listings vs. Sold Businesses

We calculate and provide valuation multiples from two sources: Current and recent listings of financial services businesses for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are generally higher due to owners setting asking prices above what their businesses might typically sell for. This occurs either intentionally as a negotiation strategy, or incidentally due to business owners’ common tendency to overvalue their own businesses.

Multiples based on comparable businesses - "comps" in business broker parlance - are much more useful as they represent the prices at which businesses ultimately get sold. Business brokers and valuation professionals will always turn to local comps when pricing businesses for sale or evaluating businesses for acquisition. We provide both sets of data at the national level to offer general context.

Quartiles, Median, and Average

No two businesses are identical, and as such, valuation multiples exist in a range. We have carved out four common values within this range: Lower quartile represents the value under which the lowest 25% of valuation multiples fell. Upper quartile represents the value above which the highest 25% of multiples fell. Median is the middle of the range, and average is the mean of the set. Mean is almost always higher than the median, driven by a minority of high volume, high value businesses sold at multiples above the upper quartile.

Businesses with consistent financial performance, above average revenue and earnings, demonstrable growth potential, low owner involvement, unique competitive advantages, and a seller willing to finance will command a multiple at or above the upper quartile. Lower volume businesses with thin profit margins, full-time owner involvement, and many direct competitors will trade at or below the lower quartile. Most businesses will fall somewhere in the middle.

Based on this data, half of financial services businesses are valued between 1.67 and 3.02 times their annual seller discretionary earnings, with 25% of well-run, larger businesses selling above this range, and 25% of smaller, less desirable firms trading below.

Financial Benchmarks

To determine how a business compares in terms of revenue and earnings relative to industry peers, it’s necessary to have some insight into industry standards. "Benchmarking" describes the practice of comparing a business’s financial performance to typical industry standards to determine where a business falls relative to other businesses in the same industry. These benchmarks can help guide owners and investors towards appropriate valuation multiples from the range above.

To that end, we have aggregated financial ranges useful for comparing an individual financial services business to its peers in the market.

Financial Service Business Revenue and Earnings Trends

Median revenue reported by financial services businesses sold has remained elevated compared to pre-pandemic levels, though there was a modest drop in 2024, as more, smaller firms we sold. At the same time, financial service business owners reported steady earnings, resulting in increased profit margins. Financial services businesses remain some of the most profitable types of small business.

Earnings Ranges

Discretionary earnings (used interchangeably with the terms "cash flow" and seller's discretionary earnings or SDE) is often the crux of business valuations, so it is important to benchmark it relative to other businesses traded on the market. Below you will find discretionary earnings ranges of financial services businesses sold over the past five years, as well as recently added listings.

Revenue Ranges

Sales volume plays a large role in business valuation, as it measures the size of the potential income opportunity for new ownership. It's not uncommon for buyers to select an earnings multiple range based on overall revenue. The table below includes revenue ranges of financial services businesses sold over the past five years, as well as recent for sale listings.

How Revenue and Earnings Level Affects Business Values

Clearly higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Well-run financial services businesses that consistently generate higher revenue (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a wealth management firm consistently generating sales over $750k annually may sell for an earnings multiple over 3, while a smaller financial planning business with sales of $200k may sell for an earnings multiple closer to 1.7.

This tendency for higher sales volumes to fetch higher valuation multiples is largely driven by the economics of business acquisition financing. Higher volume businesses give buyers more cushion to cover debt service obligations and still have enough left over to pay the new owner a reasonable income.

Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader financial services sector. The chart and table below includes key metrics from sales of select financial and legal services businesses on BizBuySell between 2019 and 2023.

Financial services businesses tend to see earnings multiples in the 2x to 3x range consistently, however, there is some variance between business models. Medical billing is a relatively lucrative, simple business that doesn't require as much costly, expert staff as other financial services businesses. Check cashing, on the other hand, is much more heavily regulated, and involves much more risk.

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