Usually not quite, because most salons sell for less than the advertised figure because the asking price is an opening position and buyers negotiate once they have seen the accounts.
An asking price is a marketing figure. It has to be high enough to leave room for negotiation and low enough that buyers actually enquire, and the agreed price normally lands somewhere below it once a buyer has been through the accounts, the lease and the booking system.
How far it moves depends on how well the asking price was set in the first place. A salon priced from its real profit, with the accounts to back it up, tends to move a little. A salon priced from what the owner hopes to retire on tends to sit unsold for months and then drop by much more, because every buyer who looks at it reaches the same conclusion.
Where the gap comes from
- Profit that is not in the accounts. If takings are not declared, a buyer cannot pay for them and a lender will not lend against them.
- A short lease. Buyers price in the risk of not getting a renewal, or the cost of negotiating one.
- Owner dependence. If many clients book with you personally, buyers discount for the ones who may leave when you do.
- Equipment that needs replacing soon, which buyers take straight off the price.
Setting a price that holds
Start from the profit left for one working owner, apply a multiple that reflects the lease, the team and how long you have traded, and then add stock at valuation on top. Our Salon Price Index shows what comparable salons are currently advertised at, which is a useful check on whether your figure will look sensible to a buyer scrolling through the listings.
Sources
- Anglo Swann Salon Price Index angloswann.com