Market Multiples for Contractor Businesses: What’s Your Company Worth?

“What’s my business worth?” It’s the most common question I heard from home services owners — whether they were seriously considering a sale or just curious. And the honest answer is always the same: it depends on what a buyer is willing to pay, which depends on a dozen factors that have nothing to do with how hard you’ve worked to build it.

But there is a framework. Home services businesses are valued on multiples of EBITDA (or SDE for smaller companies), and those multiples fall within predictable ranges based on size, profitability, revenue quality, and market conditions. After reviewing hundreds of these transactions at Apex Service Partners, I can tell you exactly what drives multiples up, what drags them down, and where the market sits today.

Current EBITDA Multiples by Trade and Size

Let’s start with the numbers. These reflect the current M&A market for home services businesses as of early 2026, based on recent transactions and buyer behavior I’m seeing across the industry.

A few important caveats. First, SDE (Seller’s Discretionary Earnings) and EBITDA are different. SDE includes the owner’s total compensation as an add-back, so multiples of SDE are naturally lower than multiples of EBITDA for the same business. Second, these ranges are wide because the multiple depends heavily on the quality of the business, not just its size. A well-run $5M HVAC company can command a higher multiple than a mediocre $15M one.

HVAC consistently trades at the highest multiples because of the essential nature of the service (broken AC in July is an emergency), strong demand-driven margins on service and repair, and the depth of the PE buyer pool focused on the space. Roofing trades at the lowest because revenue is lumpier, margins are thinner on new construction, and the service/repair mix is typically lower.

SDE vs. EBITDA: Which One Applies to You?

This causes more confusion than it should. Here’s the simple version:

SDE (Seller’s Discretionary Earnings) = Net Income + Owner’s total compensation + Interest + Taxes + Depreciation + Amortization + One-time/non-recurring expenses

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization (does NOT add back owner comp)

For companies under approximately $3M in revenue where the owner is the primary operator, buyers use SDE. The logic is that the buyer is essentially purchasing a job plus a business — they’ll need to replace the owner with a manager. SDE captures the full economic benefit of ownership.

For companies above $3M that have a management team, buyers use EBITDA. The assumption is that management costs are a real, ongoing expense that won’t go away after the sale.

The crossover point isn’t rigid. A $4M company where the owner still does everything might get valued on SDE. A $2.5M company with a strong GM might get valued on EBITDA. It depends on the structure.

What Drives Premium Multiples

The difference between 4x EBITDA and 8x EBITDA is enormous — it literally doubles your purchase price. Here’s what pushes a company toward the top of the range:

Revenue Quality and Mix

Buyers look at your overall revenue quality — and maintenance agreements are a meaningful part of that story. A strong maintenance program signals predictable, recurring revenue, much like R&R work signals stability for a construction company. But the bigger picture is your service-to-install mix. Service and repair work — demand-driven, high-margin, and repeatable — is the most attractive revenue type. A business with 60-70% service/repair revenue and strong average tickets commands higher multiples than one reliant on installation or new construction. If you have a meaningful agreement base, it helps, but most contractors’ agreement programs are small. Don’t overinvest there at the expense of your core service operations.

Margin Profile

Buyers look at gross margins and EBITDA margins together. Gross margins above 50% and EBITDA margins above 18% put you in premium territory. If your EBITDA margin is below 10%, you’ll struggle to get above median multiples regardless of how fast you’re growing. The economics need to be there.

Absentee-Friendly Operations

If the business runs without the owner’s daily involvement, the buyer’s transition risk drops dramatically. This alone can be worth 1-2x additional multiple. A management team with 2+ years of tenure, documented processes, and a track record of operating independently is the proof point.

Growth Trajectory

Historical growth matters, but the growth story going forward matters more. A company growing 10-15% annually with a clear explanation of where future growth comes from (new territory, new service lines, untapped service revenue growth potential) commands a premium over a flat or declining business.

Size

Bigger companies get higher multiples. This isn’t arbitrary — larger businesses are more diversified, less dependent on any single person, and more attractive to institutional buyers who can’t spend time on very small deals. The biggest multiple jump happens between $3M and $10M in revenue. Getting from $5M to $8M can add 1-2 turns to your multiple.

What Discounts Your Multiple

Knowing what hurts is just as important as knowing what helps.

Customer concentration. If your top 10 customers represent more than 20% of revenue (common in commercial work), buyers apply a risk discount. Losing one large account post-acquisition could destroy the investment thesis.

Owner dependency. If the owner is the lead salesperson, the head dispatcher, and the face of the company, buyers assume 6-12 months of disruption during the transition. Some PE firms apply a 5-30% discount for owner-centric businesses.

Declining or flat revenue. A business that’s been flat for three years suggests a market ceiling or an owner who’s stopped investing. Buyers either discount the multiple or simply pass.

Messy financials. If the buyer’s Quality of Earnings analysis finds significant discrepancies — revenue recognition issues, undocumented add-backs, commingled personal and business expenses — trust erodes. The price either drops or the deal falls apart.

High working capital requirements. Long accounts receivable cycles (DSO above 45 days), large inventory positions, or significant seasonal working capital swings can reduce the effective purchase price by 10-20%. Buyers deduct excess working capital needs from the enterprise value.

How Multiples Have Changed (2022-2026)

The home services M&A market has been remarkably resilient. Here’s the recent trajectory:

2021-2022: Peak multiples. Cheap capital and aggressive PE platforms pushed HVAC multiples above 10x for strong companies. Seller’s market across the board.

2023: Interest rate shock. Financing costs increased, and some buyers pulled back. Multiples compressed slightly — about 1-2 turns for mid-market deals. But home services held up better than most industries because the demand is non-discretionary.

2024-2025: Recovery and stabilization. Rate cuts in late 2024 improved financing conditions. PE platforms continued consolidating. HVAC M&A deal volume held steady at roughly 75-80 transactions per year. Multiples recovered to near 2021 levels for the best companies.

2026: The current market is favorable for sellers. Deferred maintenance from aging housing stock is driving service demand. PE platforms need acquisitions to hit growth targets. Well-prepared companies are seeing strong interest from multiple buyers.

The PE Landscape: Who’s Buying

Private equity is the dominant buyer in home services M&A. The major platforms actively acquiring include Apex Service Partners, Wrench Group, Neighborly, HomeServe, and dozens of regional platforms. There are also strategic buyers — larger home services companies acquiring smaller competitors to expand their footprint.

PE activity in this space is driven by the industry’s fragmentation. Home services is a $100+ billion market with thousands of independent operators. That fragmentation creates opportunity for platforms to buy, consolidate, and create value through shared back-office services, better purchasing, and professional management.

For sellers, more buyers means more competition for your business — which drives better pricing and terms. A well-run process with 5-10 interested parties routinely produces 15-30% higher valuations than a negotiated deal with a single buyer. For a deeper look, see our guide on whether AI-powered home services companies command higher valuations.

A Quick Way to Estimate Your Valuation

Here’s a simplified approach to ballpark your company’s value:

Step 1: Calculate your adjusted EBITDA. Start with net income, add back interest, taxes, depreciation, and amortization. Then add back one-time expenses, above-market owner compensation, and any personal expenses running through the business. Subtract below-market owner comp or any expenses that would need to increase post-sale.

Step 2: Pick your multiple range from the table above based on your trade and revenue size.

Step 3: Adjust within the range based on your quality factors — service mix, margins, management team, growth, and financial cleanliness.

Step 4: Multiply. That’s your estimated enterprise value range.

Example: A $6M revenue HVAC company with $900,000 adjusted EBITDA, 30% maintenance revenue, strong margins, and a solid management team might fall in the 6-7x range. Estimated value: $5.4M to $6.3M.

This is a rough estimate — actual valuations depend on market conditions, competitive dynamics among buyers, and the specifics of your deal. But it gives you a starting point for planning.

What to Do With This Information

Whether you’re selling next year or building for the long term, understanding how your business is valued helps you focus on the right things. Every dollar of EBITDA improvement is worth 4-8x in enterprise value. Every percentage point of service revenue increases your multiple. Every step toward an absentee-friendly business makes you more attractive to buyers.

At Profitability Partners, we help home services owners understand where they stand, identify the highest-impact improvements, and build the financial infrastructure that supports premium valuations. If you’re curious about what your business might be worth — or how to make it worth more — let’s have a conversation.

For additional industry data, visit NYU Stern Valuation Resources.

Related: The top 3 methods to value your company | HVAC company valuation | Roofing company valuation

About the Author

Matthew Mooney

Matthew Mooney is a co-founder of Profitability Partners and a former private equity professional with deep experience in home services M&A. Over the course of his career, Matthew has reviewed over 200 acquisitions of HVAC, plumbing, roofing, and electrical companies. He previously worked at Apex Service Partners, one of the largest residential home services platforms in the country — giving him a rare, buyer-side perspective on what drives valuation, profitability, and deal structure in the trades. He now helps contractors and home services business owners optimize their financials, plan for exits, and maximize the value of their companies.

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Matthew Mooney

Matthew Mooney is a co-founder of Profitability Partners and a former private equity professional with deep experience in home services M&A. Over the course of his career, Matthew has reviewed over 200 acquisitions of HVAC, plumbing, roofing, and electrical companies. He previously worked at Apex Service Partners, one of the largest residential home services platforms in the country — giving him a rare, buyer-side perspective on what drives valuation, profitability, and deal structure in the trades. He now helps contractors and home services business owners optimize their financials, plan for exits, and maximize the value of their companies.