What HVAC and Home Services Companies Are Selling For
- Cameron DuPree
- Aug 10
- 3 min read
Home services is the most active acquisition market in the lower middle market right now, and the reason is structural. Private equity discovered that residential trades produce recurring revenue, resist recession, and consolidate well. That attention is good news for owners, but only if you understand what buyers in this space actually pay for.
How these companies are valued
Owner-operated home services companies are valued on a multiple of seller's discretionary earnings. Once a company has a general manager running daily operations and earnings clear roughly a million dollars, buyers shift to adjusted EBITDA and the multiple steps up meaningfully. That shift is the single largest value jump available to most owners in this sector, and it is achievable in twelve to twenty-four months of deliberate work.
Within the sector, the ranking is consistent. HVAC commands the strongest multiples because of maintenance agreements and equipment replacement cycles. Plumbing and electrical follow closely. Roofing and exteriors typically trade lower because revenue is storm-driven, project-based, and harder to forecast, though a roofing company with a service division and recurring maintenance contracts breaks that pattern.
What buyers pay a premium for
Maintenance agreements. A membership base with recurring billing is the closest thing to contracted revenue this industry has, and buyers pay disproportionately for it. Five hundred active maintenance agreements changes the conversation about your company entirely.
Replacement versus repair mix. Higher-ticket replacement work with strong gross margins is worth more than a repair-heavy book with the same revenue.
Technician depth and retention. A company with tenured, licensed technicians and a functioning recruiting pipeline is buying itself a premium. Buyers know labor is the binding constraint in this industry.
Commercial contracts. Multi-year commercial service agreements diversify away from the weather and the housing market.
Documented pricing and dispatch systems. A company running on a real field service platform with consistent pricing is a company a buyer can scale. One running on the owner's judgment is not.
What suppresses the multiple
Owner-sold work. If you personally close the large jobs and hold the key customer relationships, buyers discount heavily, because a meaningful part of what they are buying leaves with you.
Seasonality without a plan. Every trades business has a season. Buyers care whether you have a strategy for the trough, not whether one exists.
License concentration. If the company's license is held personally by the owner and cannot transfer, that has to be solved before a sale, not during one.
Weak or missing job costing. If you cannot show gross margin by job type, buyers assume the worst version of your numbers.
What to do twelve months out
Three things move the needle most, in order: hire or promote a general manager so the business runs without you, build or grow the maintenance agreement base, and get your job costing clean enough that gross margin by service line is defensible. Each of those is worth more than any negotiating tactic available on the day an offer arrives.
Aesir Business Advisors represents owners of home services and trades companies in confidential, competitive sale processes. If you are considering an exit in the next one to three years, a valuation now tells you what the work is worth.
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