As a fractional CFO in the trades and former owner of an electrical company, I would check: 1. Gross Profit - What are they actually making on what they are selling. Make sure they are including field labor and material in COGS. A great service company is at 60% gross profit margin. A strong service company is at 50% gross profit. 2. Google Reviews - Many sellers will claim they do "service" work but if they have 27 Google reviews and a 4.6 rating, that means they are usually doing all construction work. 3. Owner's Role - Most owners will tell you what you want to hear. "I only work a few hours per day and have a great second-in command." Both usually aren't true. The second in command is usually someone you wouldn't want running the business. Even if the owner only works a few hours per day, it's because they have been doing it for a long time. They also don't factor in the amount of decisions that run through them. If these check out, then move onto the operational/licensing side of things. There are quite a few home service companies that are wayyy overpriced for what you're getting...PE is driving up multiples and now most owners think their business is worth a lot more than it actually is.

This is gold, thank you. The review point especially. The idea that volume tells you whether they're actually a service business or doing construction work is something I hadn't framed that way. Roughly what review count would you expect from a real service company doing solid volume, versus one that's really a construction shop? Trying to understand where that line sits.