HVAC / Trades Multiples

searcher profile

July 30, 2023

by a searcher from University of Pennsylvania - The Wharton School in Miami, FL, USA

Hi All!

starting a search and looking at the trades (not being original here hehe).
Question for the ones that are into the industry.
What type of multiples are you seeing for a business >$7M in revenues (>$1M SDE/EBTIDA) that has +50% services? With anyone has an overall guidance for multiples in the sector, also happy to hear! =)

Thanks!

1
21
365
Replies
21
commentor profile
Reply by a searcher
in Boston, MA, USA
I primarily focus on trades based businsesses in the ~500k to $2M in EBITDA throughout the US. Multiples are high for the attractive businesses and often the searchfunders offers are coming in 30-50% below PE offers out there. $1M+ in EBITDA, with no new construction, and heavily residential we see offers in the 6-8x depending on part of the country they're in. These offers are typically all cash so if youre using SBA vs these you're likely ruling yourself out quick by any experienced intermediary.

Commercial is less aggressive and multiples are coming down a bit over the last 6ish months as the industry comes of '22 which for many was the best year theyve ever seen. If you're looking for the traditional HVA C/Plumbing/Electric home serverice that is 99% residential doing $1M in EBITDA then youre going to need to go off market and do a proprietary outreach/get lucky finding someone whos open to the 4x multiple & if you find something sub 6-8x in this space understand that there are buyers out there paying top dollar for these to roll up and even at 8x they're able to build up to $50MM EBITDA and flip at 20x. s0 8x for a solid $1M company is an easy buy for them. Finding something on market from an intermediary that half knows what they're doing you'll likely be out bid if you're buying a one off business in this space and not doing a roll up.

Alternatively, if you want to get into it open up your search to the sub 750k space where many wont find it worth while to get into and buy 2-3, roll them up into one company doing $1M+. Much lower multiples sub $750k EBITDA in the space (likely closer to 4-5x and potentially even sub 4x
commentor profile
Reply by a professional
from Oregon State University in Kuna, ID, USA
^redacted‌- Check out the DealStats database under BVR Transactions at the top of the Searchfunder page. BVR has a lot of deals in the HVAC space and trades, in general Using your criteria, I'm getting a median EBITDA multiple of 4.0x and a mean of 7.2x within the HVAC sector. These results were in the last 5 years or so.

https://www.searchfunder.com/bvr/search

https://www.searchfunder.com/bvr/sector/582
commentor profile
+19 more replies.
Join the discussion