Is my service business valued on SDE or EBITDA?

Under roughly $1M in earnings, buyers price on seller's discretionary earnings. Above that, and once the company runs without you, buyers price on adjusted EBITDA and the buyer pool widens to private equity platforms.

Why do two companies with the same revenue sell for different prices?

Because buyers pay for earnings a buyer can count on next year. A manager-run company with contracted recurring work and employee-held credentials is a platform. An owner-run company with the same revenue is a job.

What raises my multiple the fastest?

Reducing owner dependence, growing contracted recurring revenue, moving licenses and certifications onto employees, and lowering customer concentration.

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What Is Your Service Business Worth? Multiples by Revenue Band

Updated July 15, 2026 · 9 min read

It is the first question every owner asks and the one most advisors answer badly. Your revenue number alone tells a buyer almost nothing. What decides your price is which earnings basis applies to a company your size, and how much of next year's work a buyer can count on without you running it.

This holds across every trade we work in, from HVAC and plumbing to cleaning, pest, restoration and staffing. The vocabulary changes. The math does not.

Under about $1M in earnings: you are priced on SDE

Smaller companies get valued on seller's discretionary earnings, which is your profit with your salary and personal expenses added back. Buyers here are usually individuals, a local competitor, or a regional consolidator making a tuck-in. The number lands low when the owner is still selling the work, holding the licenses, and covering the schedule personally.

Owner-sold, owner-licensed, owner-scheduled work sits at the bottom of the band.
A working general manager already in place moves you up immediately.
Contracted recurring work moves you up more than an equal amount of one-time project revenue.

Platform scale: you are priced on adjusted EBITDA

Once the company runs without the owner, the basis changes to adjusted EBITDA and the buyer pool changes with it. Private equity platforms and their portfolio companies enter, and they underwrite the next twelve months rather than the last twelve. That shift is worth more than any amount of revenue growth, because it changes the multiple applied to every dollar you earn.

Why the same revenue sells twice

Two service companies, same trade, both at $6M in revenue and both at roughly $800K in earnings. One has a general manager, contracted recurring work, and credentials held by employees. The other is the owner, a phone, and a reputation. The first is a platform. The second is a job. Buyers price them as different things because they are different things.

The four things that set your position in the band

1.Owner dependence. If the business wobbles when you take two weeks off, that is the finding that costs you the most.
2.Recurring revenue share. Contracted, auto-renewing work with price escalators, whatever your trade calls it.
3.Credential continuity. Licenses and certifications that live with employees rather than with you personally.
4.Customer concentration. One account carrying a large share of revenue reads as risk, not as a relationship.

What a real range looks like

A credible valuation is a range with reasons attached, not a single number. It should name the earnings basis, the comparable deals behind it, and the specific findings pulling you toward the top or the bottom. If someone hands you one number and no reasoning, they are marketing to you rather than advising you.

Nobody gets paid for revenue. They get paid for the part of the revenue that keeps arriving after they hand over the keys.
From 20+ years at the deal table

Getting your own number

Inside a private exit review we benchmark your company against recent deals in your trade and give you a range you can plan around, along with the two or three things most likely to move it. It is confidential, there is no obligation to list, and nothing about your company gets shared or shopped.

Common questions

Is my service business valued on SDE or EBITDA?: Under roughly $1M in earnings, buyers price on seller's discretionary earnings. Above that, and once the company runs without you, buyers price on adjusted EBITDA and the buyer pool widens to private equity platforms.
Why do two companies with the same revenue sell for different prices?: Because buyers pay for earnings a buyer can count on next year. A manager-run company with contracted recurring work and employee-held credentials is a platform. An owner-run company with the same revenue is a job.
What raises my multiple the fastest?: Reducing owner dependence, growing contracted recurring revenue, moving licenses and certifications onto employees, and lowering customer concentration.