A main-street business in Maryland typically sells for 1.5 to 2.5 times the owner's true annual earnings. Maryland stands apart because it can tax the sale itself, so how you structure and document the deal changes what the deal actually costs.
Your tax returns almost always prove a higher number.
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| Business type | Revenue multiple | Owner-earnings (SDE) multiple |
|---|---|---|
| Hair salon / Barbershop | 0.35 to 0.65 times yearly revenue | 1.5 to 2.5 times owner earnings |
| Cleaning service | 0.5 to 0.9 times yearly revenue | 1.8 to 2.8 times owner earnings |
| Landscaping / Lawn care | 0.45 to 0.85 times yearly revenue | 1.8 to 2.8 times owner earnings |
| Restaurant / Cafe | 0.25 to 0.45 times yearly revenue | 1.3 to 2.2 times owner earnings |
| Auto repair / Detailing | 0.4 to 0.75 times yearly revenue | 1.7 to 2.6 times owner earnings |
| Retail shop | 0.3 to 0.6 times yearly revenue | 1.5 to 2.3 times owner earnings |
| Other service business | 0.35 to 0.7 times yearly revenue | 1.5 to 2.5 times owner earnings |
Maryland applies its 6 percent sales and use tax to tangible personal property that changes hands in a business sale: furniture, fixtures, equipment, and supplies. Goodwill and other intangibles are not taxed, and inventory headed for resale escapes with the right resale certificate. Certain going-concern sales can qualify for exemption, but only when the paperwork proves it.
The written allocation of your purchase price decides how much of the deal is exposed. Sit down with your accountant before the contract is signed, not after, and keep contemporaneous documentation for every exemption you claim. Missing paperwork here turns into an assessment with interest and penalties later.
Maryland bars non-competes for its lowest-paid workers, but that is employment law. A covenant you give as the selling owner is a different animal: Maryland courts enforce it when the time and territory are reasonable, and the fact that you were paid for goodwill weighs against you if you later challenge it. Negotiate the years and the miles like they are permanent, because they probably are. A Maryland-licensed attorney should review the covenant, usually as one flat-fee engagement at closing.
If you run a home improvement contracting business, your Maryland Home Improvement Commission license will not transfer to your buyer. The person taking over must pass the MHIC exam, show two years of relevant experience, and prove financial solvency before the commission licenses them, and Maryland defines home improvement broadly enough to sweep in many trades.
Exam scheduling and application review take real time. A buyer who starts that process at closing is a buyer whose revenue stops. Make the license application a milestone in the purchase agreement, well before the handover date.
Collect three years of business tax returns and keep them ready to share. SBA lenders will not finance a buyer without them, and SBA money or seller financing closes most small deals. See your free range below, then have the number documented before you signal a price to the market.
Most main-street businesses sell for 1.5 to 2.5 times the owner's true yearly earnings, or their replacement value, whichever is higher and can be proven. True earnings means salary plus profit plus the personal things the business pays for. Most owners forget those add-backs count, so most owners guess low.
SBA lenders require three years of business tax returns to finance a buyer. Three years also shows a trend, not a snapshot. We saw a salon whose latest year looked like decline. Three years proved it was one expensive staffing year, and that was worth tens of thousands on her price. Fewer years looks like hiding. More rarely changes the number.
No. YourBizWorth is not a broker, appraiser, or law firm. We prepare your analysis and drafts. We flag exactly which steps need a licensed attorney, usually one flat-fee engagement at closing, often payable from the sale money. We make the lawyer cheaper, not absent.