A main-street business in Michigan typically sells for 1.5 to 2.5 times the owner's true annual earnings. That math works the same in every state. What changes in Michigan is the closing checklist: an escrow rule for old tax debts and a liquor license process that runs on the state's schedule, not yours.
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 |
Michigan holds business buyers responsible for a seller's unpaid business taxes. To protect themselves, your buyer will set aside part of the purchase price in escrow until the Michigan Department of Treasury issues a Tax Clearance Certificate showing you owe nothing. The request goes in on Form 5156, and Treasury responds with an estimated or actual amount due, which sets the size of the escrow.
None of this has to slow your deal. File the Form 5156 request as soon as you have a serious buyer, and clear up any open balances before the certificate request lands on a Treasury desk. A clean account means a small escrow and a fast release of your money.
Michigan courts uphold non-compete agreements with reasonable time and territory limits, and a covenant signed as part of a business sale is the easiest kind to enforce. Read the years and the mileage as commitments you will actually live with. Have a licensed attorney review it before you sign. It is typically a single flat-fee engagement, and the sale proceeds can cover it.
Liquor licenses in Michigan move through the Michigan Liquor Control Commission, and a transfer approval commonly takes 30 to 120 days once the paperwork is complete. Mistakes in the application usually restart the clock, so it pays to get it right the first time.
There is a shortcut worth knowing. For a buyer taking over at the same location, the Commission can issue a conditional license in roughly 20 business days when the application is in order. Ask about it early so your buyer can pour drinks from day one.
Start by pulling three years of business tax returns. Most small business purchases run on SBA loans or seller financing, and SBA lenders will not fund a buyer without those returns. Get your free valuation range below, then have the number documented before you quote a price to anyone.
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.