HVAC and plumbing business valuation calculator

Key facts

• Buyers usually price small owner-run service businesses on SDE and larger ones with a management team on EBITDA. The calculator shows both so you can see the gap between them.
• A multiple is the buyer's view of risk. Lower risk, such as recurring revenue, a team that runs without the owner and leads the business owns, tends to support a higher multiple.
• The SBA's guide to buying a business tells buyers to review financial records and the reasons behind the sale, which is why clean books and documented add-backs matter. Source: U.S. Small Business Administration: Buy an existing business or franchise
• The calculator does not use or claim market multiples. The starting multiples are placeholders. Get real numbers from a qualified broker, advisor or valuation professional.
• Your numbers stay in your browser. The share link does not include your financials.

How to use the Business Valuation Calculator

1. Pull last year's numbers. Revenue and net profit before tax from your tax return or profit and loss.
2. Add back what a buyer will not carry. Your pay and perks, one-time costs, interest, depreciation and amortization. That gives SDE.
3. Subtract a market-rate manager. What it would cost to hire someone to do your job. That gives EBITDA.
4. Enter your multiples. Low and high multiples from a broker, advisor or recent sales in your market. The defaults are placeholders.
5. Score the value drivers. Recurring revenue, owned leads, owner dependency, clean books, growth, concentration, team, systems, reviews and fleet.
6. Work the biggest levers. The calculator lists the drivers worth the most points for you, with links to the tools that help.

How much is an HVAC business worth?

As much as a buyer will pay for its future earnings, adjusted for risk. In practice that is a multiple of SDE or EBITDA. Two companies with the same revenue can be worth very different amounts: one with a membership base, a dispatcher, a strong lead tech and steady Google reviews, the other where the owner answers the phone, runs every big job and buys most leads from a platform.

That is why this calculator has two halves. The first works out your earnings. The second scores the things that move your multiple.

Seller discretionary earnings, explained

SDE is the total cash benefit the business gives one full-time owner. Start with net profit before tax, then add back:

• Your pay and perks: salary, owner draws, health insurance, a personal vehicle run through the business.
• One-time costs: a lawsuit settlement, a move, a project that will not repeat.
• Financing and non-cash costs: interest, depreciation and amortization.

Every add-back needs a paper trail. Buyers and lenders will check, and add-backs you cannot prove usually come back out.

SDE multiple vs EBITDA multiple

An SDE multiple assumes the buyer will work in the business, so the owner's pay is part of what they are buying. An EBITDA multiple assumes the buyer will hire a manager, so that salary is subtracted first. EBITDA is smaller than SDE, but EBITDA multiples are usually higher because the business is larger and less dependent on one person.

How to value a plumbing business

The method is the same as HVAC. Where plumbing differs is what buyers worry about. Plumbing revenue often leans more on emergency and one-off work and less on maintenance agreements, so a plumbing company with real membership revenue stands out. Water heater, sewer line and repipe work with good margins and documented pricing also help.

Private equity in HVAC and plumbing: what buyers look for

Private equity groups and larger platforms have been buying residential service companies. Whatever the buyer, they tend to ask the same questions: How much revenue repeats? How many new customers come from sources you own? Who runs the business day to day? Are the books clean enough to finance against? The ten drivers in the calculator follow those questions.

Getting ready to sell your HVAC or plumbing business

1. Two to three years out: build recurring revenue and owned lead sources, hire or promote a lead tech or manager, move to accrual books.
2. One year out: document processes, fix the fleet, reduce customer concentration, collect clean financials.
3. When you are ready: talk to a broker or M&A advisor for real comparable sales and multiples, and to a CPA and attorney about structure and taxes.

Field notes from our team

• Keep a running add-back file with receipts. It saves weeks when a buyer asks.
• Track membership revenue as its own line in your books.
• Track new customers by source every month, so you can prove how many leads you own.
• Take a real two-week vacation. If the business struggles, you know what to fix first.
• Run this calculator once a year and keep the share card in your planning file.

Ways to estimate what your business is worth

Frequently asked questions

Sources

• U.S. Small Business Administration: Buy an existing business or franchise

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