You want to sell your tobacco business? Then it's good to know what the takeover market in the tobacco business area looks like. The number of smokers has been declining for years and that made tobacco stores disappear from the scene in many cities. With this increased health awareness, does tobacco still have a future?
The number of acquisitions in this industry fluctuates between 10 and 30 per year.
There are many ways to value a business. A common method of expressing the value of a business is "a factor x gross annual profit." This factor is also called multiple and another designation for gross annual profit is EBITDA (Earnings Before Interest Taxes Depreciation and Amortization).
In retail, the sector to which tobacco businesses belong, an indicative range of EBITDA multiple of 1.9 to 3.0 is currently used, according to the Brookz Takeover Barometer. The average EBITDA multiple across all SME sectors is 4.90.
The valuation of a business is often the starting point for negotiations between buyer and seller. The outcome of these negotiations is the final sales price. So valuation and price are two different quantities. Besides valuation, the price is also determined by possible scarcity in the market, bargaining power of the parties, the strategic value of the business for the buyer and possible synergy effects for the buyer (cost savings, purchasing advantages).
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Want to buy a business or sell a business in the retail sector? With this Brookz Sector Monitor we want to present buyers and sellers with facts, figures and an outlook that provide insight into the number of transactions, the value development of businesses and the latest trends and developments in the retail sector. Because in any buying or selling process, thorough preparation provides peace of mind, overview and structure.
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The number of tobacco businesses increased again last year.
In figures, the number of tobacco stores in 2024 looked as follows(CBS):
With this online training from Brookz you are optimally prepared to largely sell your business yourself: 25 Powerpoint videos, a comprehensive valuation report, legal model contracts, handy templates, checklists and expert support. Plus 50% discount on listing your business on Brookz!
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A number of trends and developments will inevitably cause changes over the next few years, but also offer tobacco businesses many growth and acquisition opportunities:
Smoking carries considerable health risks including cancer, respiratory diseases and infertility. And as a result, the number of smokers is decreasing every year. In 2020, 23% of men and 18% of women in the Netherlands smoked. Governments and businesses are striving for a smoke-free future. And that puts a lot of pressure on the tobacco industry, but new products are also emerging, such as vapors. These still contain tobacco, but to a much lesser extent than a good old cigarette. Philip Morris has a goal of getting 50% of their revenue from "smoke free product" by 2025.
Health motives are putting pressure on the tobacco industry, but that doesn't have to mean the end. BioBetter, a producer of cultured meat argues that tobacco will have a new future in the production of cultured meat. This plant can stimulate the cell growth of this meat successor. And that's good news for the industry, but also for the world.
