Pet Grooming 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 pet grooming businesses relative to industry standards.

See also: Dog Daycare & Boarding Business Valuation Benchmarks

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Highlights of Pet Grooming Businesses Sold on BizBuySell

Pet grooming businesses listed and sold on BizBuySell provide essential grooming services, including bathing, haircuts, nail trimming, ear cleaning, and even spa-like treatments for cats and dogs. Offering both storefront and mobile services, they cater to pet owners who seek to ensure the health, hygiene, and appearance of their dogs and other pets. While most of these businesses are independently owned and operated, franchise brands also operate in this space and are included in the data in this report.

Pet Grooming Business Transaction Trends

Median sale prices of pet grooming businesses have been fairly consistent, rising and falling with the rest of the market as interest rates and other macroeconomic factors influence values. In general, growth of pet grooming business sale prices has outpaced the broader small business sales market.

Pet Grooming 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 pet grooming businesses surged in 2023 as several larger businesses entered the market, raising average earnings and revenue multiples. Since then, valuations have returned to their normal levels.

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 - most business valuations will hinge on a reasonable 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 pet grooming 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 pet grooming businesses are valued between 1.36 and 2.46 times their annual seller discretionary earnings, with 25% of well-managed, larger businesses trading above this range, and 25% of smaller, less desirable pet grooming businesses 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 a pet grooming business to its peers in the market.

Pet Grooming Business Revenue and Earnings Trends

Median revenue of pet grooming businesses fluctuates around $300,000 annually, while owner's earnings hover just below 30%. While smaller than other service businesses, the profit margins are materially greater than average.

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 pet grooming businesses sold over the past five years, as well as recent for sale 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 pet grooming 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. Pet grooming businesses that generate higher sales (and maintain high profit margins) tend to sell for earnings multiples on the higher end. So, a pet grooming business consistently generating sales over $500k annually may sell for an earnings multiple of 2.5x or better, where a similar business with sales below $200k would likely sell for an earnings multiple below 1.5.

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 service sector when benchmarking pet grooming businesses. The chart and table below include key metrics from sales of select service businesses on BizBuySell between 2020 and 2024.

Compared to other businesses in the service space, pet grooming businesses tend to receive a slight valuation premium relative to their small sales and earning potential.

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