Nail Salon Business Valuation Benchmarks

Business owners, prospective buyers, and industry investors 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 nail salon businesses relative to industry standards.

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Highlights of Nail Salons Sold on BizBuySell

Nail salons are a Main Street staple, providing a place to get a manicure, pedicure, and for many, a chance to socialize with others in the local community. The business model is straightforward, and success relies on both the quality of service provided, and the atmosphere and friendliness of the staff.

Most of the nail salon businesses listed and sold on BizBuySell are independently owned brands, though occasionally, franchise brands are listed and may be included in this report.

Nail Salon Business Transaction Trends

The median sale price of nail salon businesses sold on BizBuySell has been fairly stable, with modest growth in 2022 and 2023 (counter to interest rate pressure) followed by a return to average prices in 2024.

Nail Salon 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.

Earnings multiples of nail salon businesses fell from the 1.55 range to a low of 1.3 in 2020, at the height of the pandemic. Since then, the average earnings multiple has been on a significant growth trend, surpassing pre-pandemic values to peak at 1.8 in 2024.

Revenue multiples, on the other hand, have been largely flat. This disparity is tied to a trend of slightly lower profit margins and higher revenue, discussed below.

Earnings Multiples

Earnings multiples represent the value of a business relative to its owner's discretionary earnings. Arguably the most important valuation metric - as the seller's discretionary earnings will often dictate how much a buyer is able to borrow to finance the business acquisition - most valuations will 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 nail salon 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 nail salon businesses are valued between 1.09 and 1.89 times their annual seller discretionary earnings, with 25% of exceptional, high traffic salons trading above this range, and 25% of smaller, less popular ones 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 nail salon business to its peers in the market.

Nail Salon Business Revenue and Earnings Trends

Median revenue of nail salon businesses listed for sale has been fairly consistent, with a trend of increasing sales. At the same time, discretionary earnings has remained mostly flat, which may indicate that inflationary pressures are increasing expenses, which are then passed on to the customers.

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 for nail salon businesses sold over the past five years and those recently listed for sale.

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 nail salons sold over the past five years and those recently listed for sale.

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. Popular nail salons that consistently generate higher revenue (and maintain reasonable profit margins) tend to sell for earnings multiples on the higher end. So, a nail salon consistently generating sales of $600k annually may sell for an earnings multiple of 1.9 or higher, while a less popular salon with sales well below $250k would likely sell for an earnings multiple closer to 1.1.

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 beauty and personal care sector when benchmarking nail salon businesses. The chart and table below includes key metrics from sales of select beauty and personal care businesses on BizBuySell between 2020 and 2024.

Compared to other businesses in the beauty and personal care sector, nail salons tend to be discounted relative to their sales volume. The primary driver of these lower valuations is likely the business model's heavy reliance on skilled and friendly staff, which can make management of the business more complicated and costly compared to others in the space.

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