How salons are valuedand what changes the price

What a buyer is paying for

A buyer pays for the profit they expect the salon to make for them after they take over. To work that out, we start from the net profit in your accounts and add back your own salary, pension and any personal or one-off costs run through the business. The result is the profit available to one working owner, sometimes called seller's discretionary earnings.

The multiple

That profit is multiplied by a figure reflecting how safe it looks. Owner-run salons generally sell for a low single-digit multiple of that profit, with the exact figure set by the lease, the team, the location, the records and how much of the business depends on you. We explain the multiple we have used and why.

Why turnover is not enough

Two salons with the same turnover can be worth very different sums. If one pays a high rent and has a large employed team, and the other pays a low rent with chair renters covering their own costs, the profit left for the owner can differ by tens of thousands of pounds a year. A valuation based only on turnover is usually wrong.

Equipment and stock

Equipment and fit-out are normally included in the price. Retail stock is often added on top at its value on the day of completion, which listings show as "plus SAV", meaning stock at valuation.

What lowers the value

A lease with little time left, a rent that is high for the takings, staff likely to leave with the owner, prepaid courses or vouchers that the buyer has to honour, and missing or unclear records all reduce what a buyer will pay. Most of these can be improved before going to market.

What puts the value up

Buyers pay more for a salon with a loyal client base that books again, a settled and experienced team, a secure lease at a fair rent, good Google reviews, an online booking system, tidy premises and clear accounts. Several income lines, such as retail alongside services or rooms rented to other therapists, help as well, because the salon does not rely on one source of takings.

How to raise the value before you sell

Most owners can improve the figure within six to twelve months. Trim costs that do not earn their keep and review your prices against salons nearby. Make sure the salon can run for a week without you, because a buyer pays more for a business that does not depend on its owner. Fix anything worn or broken, keep your Google reviews and booking system up to date, and ask your accountant to produce accounts that show the real profit clearly, since these speed up the buyer's checks.

Freehold or leasehold

Most salons are leasehold, and they sell well when the lease has several years left and the rent is fair for the takings. Where you own the building, the freehold can be sold with the business, which widens the price and the pool of buyers, or kept and let to the new owner as a separate income.

Does location matter?

Yes. Salons on busy high streets, in affluent towns, shopping centres, villages and commuter areas tend to attract more buyers. A strong business in a quieter spot still sells well, because buyers follow the profit and the client base as much as the footfall.

Is goodwill valuable?

Goodwill is the part of the price above the value of the equipment and fit-out, and it reflects the clients, reputation and profit the buyer is taking on. In a profitable salon it is usually the largest part of the price, which is why a business built around the owner's own column is worth less than one where the clients belong to the salon.