How Much Is My HVAC Business Worth?
Most HVAC companies are valued as a multiple of adjusted EBITDA. The multiple depends on your size, your recurring revenue, how much the business depends on you, and how clean your books are.
The Basic Formula
Buyers rarely value an HVAC company on revenue alone. They start with adjusted EBITDA, the profit the business makes from its everyday work after adding back costs a new owner would not have, like above-market owner pay or one-time expenses. Then they multiply it.
Value = Adjusted EBITDA × Multiple
If EBITDA is new to you, start with our plain-English guide: What Is EBITDA?
What Pushes Your Multiple Up
- A strong maintenance agreement base. Agreements turn seasonal revenue into recurring revenue and feed future replacements.
- A healthy service and replacement mix. Residential service and replacement work is valued more highly than new construction.
- A team that runs without you. A service manager, dispatcher, and comfort advisors who sell without you in the room.
- Clean monthly financials. Accurate books, job costing, and documented add-backs that hold up in diligence.
- Size. Larger companies draw more buyers. Crossing into platform territory, often discussed around $5M of EBITDA, typically brings the highest multiples.
What Pulls It Down
- You run most sales calls, estimates, and key relationships.
- Revenue swings hard between peak seasons with little agreement income to smooth it out.
- Personal expenses are mixed into the business and books close late.
- High technician turnover or no clear second in command.
A Simple Example
Say your company does $12 million in revenue with $1.5 million of adjusted EBITDA. Using illustrative multiples:
- At 4 times EBITDA, the business would be worth about $6 million.
- At 6 times EBITDA, about $9 million.
Same revenue, a $3 million difference, driven by the factors above. These multiples are for illustration only. Real multiples depend on the buyer, the market, and the company.
How to Raise Your Number Before You Sell
- Grow and properly price your maintenance agreement base.
- Put a manager in place who can run the day to day.
- Get clean, consistent monthly financials and document every add-back.
- Move sales and key relationships off your plate and onto your team.
- Start one to three years before you want to sell.
See Where Your Business Stands.
Take the free Exit Readiness Scorecard and get a clear read on what is helping and hurting your value.