What Is My Service Business Worth? A Plain-English Guide
Updated September 1, 2026 · 7 min read
Most owners ask the same first question: what is my business worth? The honest answer is that value comes down to two things, your real earnings and how much of the work depends on you.
This guide walks through the math buyers use, in plain words, with no banker jargon.
Step 1: Find your real earnings (SDE or EBITDA)
Tax returns are built to show low profit. Buyers back out the owner-only costs to see what the business really earns.
Smaller shops get priced on SDE (Seller's Discretionary Earnings), which is profit plus one owner's pay and perks. Bigger shops get priced on EBITDA, which keeps a market-rate manager's salary in the numbers.
- Add back: your salary, personal vehicles, family on payroll, one-time legal or storm costs.
- Do not add back: real repairs, real truck replacement, real crew pay.
- Rule of thumb: under about $1M in earnings is usually SDE territory; above that, buyers talk EBITDA.
Step 2: Apply a multiple, and know what moves it
Service businesses commonly trade in a range of roughly 3x to 6x adjusted earnings, and higher when the company is large, recurring, and truly manager-run. The multiple, not the earnings, is where most of the money is won or lost.
- Recurring contracts and service agreements: the single biggest lift.
- Owner dependence: if you sell every job, buyers discount hard.
- Clean books: monthly financials that tie to the bank beat a shoebox every time.
- Crew depth: licensed techs who stay after closing protect the price.
- Customer mix: no single account over about 10-15% of revenue.
Step 3: Understand what you actually take home
Price is not proceeds. Deals usually include cash at close, a working-capital true-up, and sometimes a seller note or an earnout tied to the next year or two.
A slightly lower price with 90% cash at close often beats a headline number that is half contingent.
Step 4: Fix the cheap stuff before you go to market
Six to twelve months of cleanup is usually worth more than any negotiating trick.
- Get financials on accrual-ish monthly reporting.
- Put pricing, warranties, and service agreements in writing.
- Move yourself out of dispatch and sales.
- Document licenses, insurance, fleet condition, and open warranty work.
Common questions
- How much is my HVAC or plumbing business worth?
- Most service businesses sell for roughly 3x to 6x adjusted earnings (SDE or EBITDA). Recurring service agreements, low owner dependence, and clean monthly financials push you toward the top of that range.
- What is the difference between SDE and EBITDA?
- SDE adds one owner's full pay and perks back to profit and is used for smaller businesses. EBITDA keeps a market-rate manager's salary as a cost and is used for larger, manager-run companies.
- Do I need audited financials to sell?
- No. Most service businesses sell with clean internal monthly statements, tax returns, and good job-level records. Audits are rare below the upper middle market.