Towing Company 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 towing companies relative to industry standards.

See also: Auto Repair and Service Shop Business Valuation Metrics

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Highlights of Towing Companies Sold on BizBuySell

Towing businesses listed and sold on BizBuySell range from light, medium, and heavy-duty towing service providers, often offering roadside assistance, vehicle recovery, impound lot operations, and storage services. Their tow trucks also engage in related industries, such as automotive repossession and fleet transportation. The towing industry presents attractive opportunities due to its consistent demand, relatively high barriers to entry, recession resistance, and above average earnings.

Towing Company Business Transaction Trends

Median sale prices of towing companies listed and sold on BizBuySell had been fairly consistent until 2021, when a disproportionate number of larger tow truck operations entered the business-for-sale market, driving up the median sale price. Prices fell in 2022, and have returned to typical levels, growing modestly each year through 2024.

Asking prices compared to sale prices in this industry are unusually close, signifying above average demand for tow truck businesses.

Towing Company Business Valuation Multiples

Valuation, or pricing, multiples are financial tools that allow for comparisons between businesses that have different levels of sales and financial performance. They represent the sales price of a business relative to its revenue or earnings, 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. Towing company valuation multiples are fairly consistent, with the exception of a spike in 2021 - the result of an influx of higher volume towing companies selling at higher multiples. The average earnings multiple has since levelled off, but revenue multiples peaked in 2024, and towing companies sold reported much higher profit margins.

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 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 towing companies for sale, and our database of "comparable" businesses sold on BizBuySell. Multiples based on listing data are usually higher due to owners setting asking prices above what their businesses will ultimately 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 actually sell. 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 towing companies are valued and sold between 2.05 and 3.84 times their annual seller discretionary earnings, with 25% of well-run, larger tow truck companies trading above this range, and 25% of smaller, less desirable towing businesses trading below.

Financial Benchmarks

To determine how a business compares in terms of sales volume and financial performance 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 towing company owners and buyers towards appropriate valuation multiples from the range above.

To that end, we have aggregated financial ranges of towing business sold on BizBuySell that can be useful for comparing a given tow truck company to the market.

Towing Company Revenue and Earnings Trends

Median revenue of towing companies listed and sold on BizBuySell is generally consistent year-to-year, with the exception of 2021. In that year, a disproportionate number of larger towing companies entered the market, likely to capitalize on market-wide valuation growth. Median revenue fell in 2022, and has grown through 2024, returning to typical "pre-pandemic" levels.

Median discretionary earnings follow a similar trend, though profit margins have improved substantially in the past three years, hitting a high-water mark in 2024.

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 similar businesses traded on the business for sale market. Below you will find discretionary earnings ranges for towing companies sold over the past five years, as well as recent towing business for sale listings.

Revenue Ranges

Revenue 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 volume. The table below includes revenue ranges of towing businesses sold over the past five years and recent towing companies listed for sale.

How Revenue and Earnings Level Affects Business Values

Obviously, higher levels of earnings lead to higher valuations, even given the same multiple. However, valuation multiples also tend to rise with business sales volume. Towing companies that consistently generate higher sales (and maintain benchmark profit margins) tend to sell for earnings multiples on the higher end. So, a towing company generating over $2.5MM in revenue may command an earnings multiple of 3.84 or better, while a smaller tow truck company with sales below $800k may trade below 2.05 times its owner's discretionary earnings.

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

Automotive Service Sector Comparisons

For a more complete understanding of the market and valuation standards, consider comparisons within the broader automotive services category when benchmarking tow truck companies. The chart and table below include key metrics from sales of select, related, automotive businesses on BizBuySell from 2020 through 2024.

Valuations in the automotive services sector vary widely, depending largely on sales volume, and the level of labor required to operate a given business model. Towing companies fall fairly close to the sector average, with a slight valuation premium thanks to their higher average profits.

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