Selling my small pizza business - What is it worth?

I am selling my pizza business.

How do I find out what it’s actually worth without paying a ton of $$$ to some accountant?

A while back there was an article with some formulas in Pizza Magazine to determine what my business is worth.

I don’t have the article any longer and I can’t find it anywhere on the web site.

I’m looking for a form or set of formulas (free of course) that will give me a ballpark number of what my small pizza business is worth. Any help is greatly appreciated!

its only worth what someone will gladly pay…

many believe it will only fetch 2-3 X’s yearly cash flow…

Hopefully you’ve kept accurate, reliable records…

My suggestion is to search/find an excellent business broker, as they might be more successful in bringing you qualified buyers…they will look @ your biz and price it accordingly, as they will be getting the commish…

Put a realistic date on when the listing expires (6 mos?) and look 4 an easy out if yer not satisfied w/their performance…

If your shop is only grossing, say $300K and netting you $25-$50K, it will be harder 2 sell, as then someone else is just “buying” a J.O.B.

If your grossing $500/600+ and netting a decent cash flow, that’s another story…

Be willing to take back some “paper” w/interest if you indeed have a hi-volume operation

I’ve always been under the impression it was somwhere around 2-3x the annual profit, that can be verified. Including equipment, furniture, fixtures, but excluding inventory and real estate.

It is, I Believe between 2.4 to 2.6 the amount you netted.



If you’ll look at the front page of this forum (the page where you see all the topics posted) you might notice some “stickies” at the top. There’s one that lists FAQ’s. This post is an FAQ and you will find a wealth of “free” information there as there are about 10 subjects discussing the same topic.

After you read these posts and still have questions, we’ll happily oblige with answers.


Read an excellent book by a fellow named Peter Siegel called “Business for Sale, How to Buy or Sell a Small Business.” I used it as the primary reference when I sold my picture frame shop/art gallery and it helped tremendously. I’m using it now as I consider a small pizzeria here in Colorado. It details a lot of issues involved in selling a business including whether to deal with a broker (I did not, but would do so depending on circumstances), how to find buyers and sellers, and valuation. He does not go into valuation exhaustively, but certainly gives enough info for you to value your business without an accountant. The cash flow multiplier (often ranging from 1 - 5X’s) is most often based on net profit, owner’s salary, and other perks that flow to the owner, added together to come up with a “net cash flow” - not the same as simple profit. Indeed, as "Patriot’ said, good book keeping will make your life a whole lot easier. If you haven’t kept them well, hire a bookeeper to help you figure them out, and be honest with them. An accountant will be important, particularly if you find a buyer, when it comes to how to put the sale numbers together for tax purposes.

Thank you for taking the time to answer my email! I’m on my way to go get that book TODAY!!! This was the best info I got from anyone who reponded!

Thanks AGAIN!

  • D

If you want a generic multiplier, 1-1.25x of cash flow if cash flow is less than $50k. 1.25x to 1.5x if cash flow between $50k and $120k, over $120k will get you 1.5x to 3x.

Like real estate, location matters. If you are in Manhattan for example, you will get more for a similar cash flowing business than someone in Harlem.

Also the longer in business the better.

Business Brokers ALMOST always have open listing agreements with business owners. You can always effectively stop using one at any point. While you will tell broker ahead of time that he has the open listing for 180 days, you can simply tell him that you no longer will consider any clients he brings forward. Since brokers do not like wasting their time, that will stop him from trying to sell.

Selling a business is not like selling a house. If you no anyone who signed an exclusive agreement with a business broker they got taken advantage of. That is not standard practice.