What SDE multiple should I expect for my restaurant in Baltimore?

Baltimore area restaurants typically sell in the range of 2x–3x SDE, with well-established concepts on transferable leases in strong neighborhoods hitting the higher end. Key factors that push your multiple up include consistent revenue over at least 3 years, a stable management team that doesn't depend entirely on you, and a liquor license that is transferable — Maryland liquor licenses are county-regulated, and some are highly restricted in transfer, which affects value significantly.

Does Maryland have a bulk sales law that affects how I sell my business assets?

Yes — Maryland has adopted bulk sales provisions under its version of the Uniform Commercial Code, which can require creditor notification in certain asset-heavy transactions. This is most relevant if your business has significant inventory or equipment and outstanding trade creditors. A Maryland business attorney should review whether your specific transaction triggers these requirements before you sign a purchase agreement, as failure to comply can expose a buyer to successor liability claims.

How does Maryland's business personal property tax affect a sale?

Maryland's business personal property tax, administered by SDAT, requires annual Form 1 filings — and buyers will verify compliance as part of due diligence. If your filings are delinquent or you have outstanding assessments, buyers can use this as leverage to reduce the purchase price or may walk away entirely if the liability is unclear. Cleaning up SDAT compliance before you go to market is a straightforward step that protects your valuation.

Are professional licenses transferable to a buyer in Maryland?

It depends on the license type — and this is one of the most important questions to answer before listing. Maryland Home Improvement Contractor (MHIC) licenses, for example, are issued to individuals, not businesses, meaning a buyer must apply for their own license before legally operating. Healthcare and financial services licenses face similar restrictions. If your business revenue depends on a non-transferable license, buyers will discount their offer to account for the gap period and application risk.

What's the difference between an asset sale and a stock sale for a Maryland LLC?

In an asset sale, the buyer purchases specific business assets — equipment, goodwill, contracts, customer lists — rather than your legal entity, and the LLC itself remains yours to wind down. Most small business sales in Maryland are structured this way because buyers want protection from unknown liabilities attached to the existing entity. A stock or membership interest sale transfers the entire entity including its history of liabilities, which requires deeper due diligence and typically involves more complex representations and warranties in the purchase agreement.

How does Maryland's estate tax threshold affect business valuation for succession planning?

Maryland's estate tax exemption is $5 million — significantly below the current federal exemption of approximately $13.6 million — meaning Maryland business owners with valuable businesses can face state estate tax liability that their heirs won't face in most other states. An accurate, defensible business valuation from a CVA or ABV-credentialed appraiser is essential for estate planning in this situation. Without it, your estate could be assessed at an inflated value, increasing the tax burden on your heirs unnecessarily.

How to Value a Small Business in Maryland

Why Business Valuation in Maryland Is More Nuanced Than Most Owners Expect

Maryland sits in one of the most economically layered regions in the country. You have the federal government employment corridor running through Montgomery and Prince George's counties, a major port economy anchoring Baltimore, a growing biotech and life sciences cluster around the I-270 Technology Corridor, and a coastal tourism economy on the Eastern Shore. What a small business is worth in Bethesda looks very different from what the same type of business is worth in Salisbury — and understanding that geography matters is step one in any honest valuation conversation.

Most small business owners underestimate or overestimate their business value for the same reason: they're using gut feel instead of a structured methodology. This guide walks you through how valuation actually works in Maryland, what multiples are realistic in your market and industry, and what state-specific factors affect how buyers perceive risk — and therefore price.

The Three Core Valuation Methods Maryland Buyers and Brokers Use

1. Seller's Discretionary Earnings (SDE) Multiple

For small businesses under $2 million in sale price, the most common method is the SDE multiple. SDE is your net profit plus your salary, benefits, depreciation, amortization, one-time expenses, and any other non-cash or owner-specific charges added back. This gives buyers a picture of the true cash flow the business generates for a single owner-operator. In Maryland, SDE multiples generally range from 1.5x to 3.5x, with the specific multiple driven by business type, location, owner dependency, lease terms, and revenue trend.

Service businesses (cleaning, landscaping, HVAC): 1.5x–2.5x SDE
Restaurants and food service in Baltimore metro: 2x–3x SDE, assuming strong reviews and a transferable lease
Retail businesses (brick-and-mortar): 1.5x–2.5x SDE, heavily discounted if lease is uncertain
Medical or dental practices in suburban Maryland: 2.5x–4x SDE, higher when a clean patient panel and strong referral network exist
B2B services and government contractors in the DMV corridor: 3x–5x SDE, particularly when contracts are assignable

2. EBITDA Multiple (For Larger or More Complex Businesses)

Once a business clears roughly $500,000 in annual earnings before interest, taxes, depreciation, and amortization, buyers shift toward EBITDA-based analysis. Maryland businesses in manufacturing, distribution, healthcare services, or technology that generate $750K–$2M in EBITDA commonly trade at 4x–7x EBITDA. Federal government contractors with long-term, assignable task orders often command the higher end of that range — and sometimes beyond — because of the recurring, low-churn revenue profile.

3. Asset-Based Valuation

If your business is asset-heavy — a construction company, a commercial cleaning fleet, a restaurant with owned equipment — buyers will also analyze the liquidation or replacement value of tangible assets. This becomes particularly relevant if earnings are inconsistent. For most operating businesses in Maryland, asset value sets a floor, not a ceiling.

Maryland-Specific Factors That Directly Affect Your Business Value

Government and Federal Employment Proximity

Maryland has more federal employees per capita than nearly any other state. The NSA, NIH, FDA, USDA, and dozens of other agencies are headquartered here. Businesses that serve federal employees — whether that's a sandwich shop near Fort Meade, an accounting firm in Silver Spring that files government contractor returns, or an IT staffing company with active GSA Schedule contracts — carry a premium in this market. Buyers understand that federal employment provides recession-resistant consumer spending, which lowers perceived risk and justifies higher multiples.

The I-270 Biotech and Life Sciences Corridor

Montgomery County is home to one of the largest concentrations of biotech and life sciences firms outside of Boston and San Francisco. Businesses that supply, support, or serve this cluster — lab equipment distributors, specialized staffing firms, compliance consultants, facilities maintenance companies — frequently see elevated buyer interest because the customer base is stable and well-funded. If your business touches this corridor, make sure your financials clearly document which clients are in the life sciences sector.

Baltimore's Port and Logistics Economy

The Port of Baltimore is consistently one of the top U.S. ports for vehicle imports and ro-ro cargo. Businesses in freight brokerage, customs compliance, trucking, warehousing, and industrial services tied to the port have strong regional demand. The 2024 Francis Scott Key Bridge collapse created short-term disruption, but port operations have recovered and long-term infrastructure investment is ongoing — meaning logistics businesses in the Baltimore metro are seeing renewed buyer confidence.

Maryland's Cost Structure and Tax Environment

Maryland's combined state and local income tax burden is among the highest in the mid-Atlantic. The state income tax runs from 2% to 5.75%, and county income taxes add another 2.25% to 3.2% depending on jurisdiction. This affects seller net proceeds calculations — and buyers who plan to operate as pass-through entities take Maryland's tax environment into account when modeling their return. Maryland also imposes a business personal property tax administered through the Maryland State Department of Assessments and Taxation (SDAT). Business personal property returns are filed annually using Form 1 with SDAT. Buyers will review your compliance history here — delinquent filings can slow or kill a deal.

Licensing and Regulatory Compliance

Maryland requires most businesses to maintain state and local licenses. The Maryland Department of Labor, Licensing and Regulation (DLLR) — now reorganized under the Maryland Department of Labor (MDL) — oversees occupational licensing. Businesses in regulated industries (home improvement contractors under MHIC licensure, real estate, healthcare, financial services) must ensure licenses are current and, critically, understand whether those licenses are transferable to a buyer or require the buyer to apply independently. Non-transferable licenses can reduce your pool of qualified buyers or add months to a closing timeline. Work with your broker and a Maryland business attorney to map this out before you go to market.

Maryland's Business Entity and Transfer Rules

Most small business sales in Maryland are structured as asset sales rather than entity sales, particularly for LLCs and S-Corps. In an asset sale, the buyer is not acquiring your legal entity — they're purchasing the assets, goodwill, customer lists, and contracts. This has implications for Maryland's bulk sales law (found in the Uniform Commercial Code as adopted in Maryland), which requires notification to creditors in certain asset-heavy transactions. Your attorney will advise on whether bulk sales notice requirements apply. Maryland also requires a good standing certificate from SDAT as part of closing documentation — make sure your annual reports and any outstanding franchise taxes are current before you list.

How to Prepare Your Financials for Valuation

Valuation is only as accurate as your financial documentation. Maryland business buyers — especially those working with SBA lenders — will require three years of federal tax returns, three years of profit and loss statements, and current year-to-date financials. Inconsistencies between your tax returns and your P&Ls are one of the most common deal-killers at the due diligence stage. If you've been aggressively expensing personal items through the business (which many owners do legitimately), those add-backs need to be clearly documented and defensible.

Work with a CPA familiar with business sales — not just business operations — to prepare a clean recast P&L that accurately reflects SDE. In Maryland's suburban markets especially, buyers are sophisticated. Many are coming out of federal government careers or corporate backgrounds and will scrutinize your numbers carefully.

What Your Business Is Really Worth: Getting a Formal Opinion of Value

A licensed business broker can provide a Broker Opinion of Value (BOV), which is not the same as a formal certified business appraisal but is a practical, market-informed estimate suitable for most small business sale processes. If you need a certified appraisal — for divorce, estate planning, or litigation — you'll want a Certified Valuation Analyst (CVA) or Accredited in Business Valuation (ABV) designee. In Maryland, estate situations involving business interests may intersect with Maryland's estate tax, which has a $5 million exemption threshold (lower than the federal threshold), making accurate valuation especially important for estate planning purposes.

Barrett Henry works with qualified Maryland business brokers across the state — from the Baltimore metro to the Eastern Shore — who understand local market conditions and can provide an honest, data-backed valuation assessment. If you're thinking about selling, the right starting point is a no-obligation conversation with someone who knows what Maryland buyers are actually paying.

How to Value a Small Business in Maryland: A Seller's Guide