If you ask ten different valuators what your HVAC company is worth, you'll get ten different numbers. That's frustrating — but it's also normal. Valuation is part art, part science.
But buyers aren't ten different valuators. They're disciplined and systematic. Here's exactly how PE-backed platforms and strategic acquirers value trades businesses.
The EBITDA Multiple Framework
Almost every trades business sale comes down to an EBITDA multiple. The formula is simple: Enterprise Value = EBITDA x Multiple.
What changes is the multiple. And the multiple is determined by a standardized set of factors that every buyer runs through:
- Recurring vs. project revenue. Recurring service contracts = higher multiples. Project work = lower multiples.
- Customer concentration. No single customer above 10% of revenue = better. Heavy concentration = discount.
- Technician retention. Stable crew with low turnover = premium. High turnover = risk factor.
- Revenue growth rate. Flat = baseline multiple. 10%+ growth = premium. Declining = discount.
- Owner dependency. Can the business run without you? Independence = higher multiple.
- Financial cleanliness. Clean books with normalized expenses = premium. Messy financials = discount.
Current Market Multiples (2026)
Premium HVAC/Plumbing (60%+ recurring, strong growth): 9-12x EBITDA
Mid-market (40% recurring, flat/modest growth): 6-8x EBITDA
Project-heavy (minimal recurring, owner-dependent): 4-6x EBITDA
These are typical ranges. The actual multiple depends heavily on your specific business profile.
EBITDA Add-Backs
Before you do math on the multiple, you need to normalize EBITDA. Most trades owners have expenses that aren't going to exist post-sale:
- Owner compensation above market rate
- Owner's health insurance and benefits
- Non-recurring legal or accounting fees
- Personal vehicle or equipment expenses
- Discretionary travel or entertainment
A $1M EBITDA business on the surface might be $1.3M once you add back these owner-specific expenses. That's a 30% increase in value.
What Buyers Don't Care About
Your hard work. Your loyalty to employees. Your deep relationships with customers. None of that shows up in a buyer's valuation model.
What they care about: predictable cash flow, transferable systems, and a team that can execute without you.
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