Residential HVAC, Plumbing, & Electrical EBITDA multiples

3x - 5x: Subscale company
5x - 8x: Independents / family owned
8x - 12x: Large independents
12x - 15x: Regional platforms
15x - 20x: Super Regional / National

Here’s a list of what increases value for these home services companies 👇🏼 Residential

90%+ of your company should focus on residential. Superior payment terms and pricing power with the customer enhance your valuation because that’s what the buy side (private equity) are looking for.

As a former Investment Banker and now owner / operator of a residential HVAC company, I operate the business as if I’ll sell at any moment even though I have no intention of selling for the foreseeable future.

Here’s a list of things current business owners can start doing to enhance the sale process and potential valuation of your company whether you’re selling next year or 20 years from now. 👇🏼 Personal Addbacks to EBITDA

Stop running personal expenses through the business to lower your tax liability. I get it, I know why you’re doing it. But stop doing it. Family vacations, boat, plane, RVs, etc should not show up in the P&L.

There’s a reason why one HVAC, Plumbing, & Electrical company will trade for 5x and another for 12x.

And why the private equity-backed platforms trade for 17x - 20x+.

Key company attributes that influence valuation … End Market Exposure
Residential trades at significantly richer EV/EBITDA multiplies versus commercial & industrial.

There’s even a material difference between residential and “light commercial” (<25 tons).

HVAC/P/E companies 100% focused on residential will trade for a couple turns of EBITDA more than a similar company with 70% residential / 30% light commercial.