Learn how serious buyers actually price HVAC companies, why two shops with the same revenue can be worth very different amounts, and what you can do to move your multiple up before you ever think about selling.
Key Takeaway: Your HVAC company is not worth “whatever a buyer offers” or “what you heard another shop got.” Serious buyers pay for earnings, risk, and how well the business runs without you. This toolkit turns valuation from a rumor into a clear, working number you can actually improve.
You did not mean to end up on another late night with a spreadsheet. It is quiet. Everyone is asleep. You are at the kitchen table with a legal pad on one side and your laptop on the other.
There are three numbers in front of you:
• A number you heard a friend got when he sold his shop.
• A number a broker floated in a casual call.
• A number you wrote down that would let you pay off the house, take care of the kids, and finally breathe.
None of them match.
You open your P&L and balance sheet. You know revenue, you have a rough sense of profit, but the jump from “what we made last year” to “what the company is worth” feels like a foggy gap.
You start to wonder:
• What would a serious buyer actually pay for this business?
• Is the number in my head realistic or just a wish?
• Am I already in the ballpark and do not know it, or way off?
This toolkit is here to close that gap. Not with a magic multiple or a promise that “every HVAC shop sells for X.” With a clear, practical look at how buyers actually think, and how that translates into a number for a company like yours.
If you are already in talks and the offer feels rushed, confusing, or light, read Am I Being Rushed and Lowballed?. This post gives you the valuation baseline so you know what your company is likely worth and why.
There are really three valuation numbers in play:
1. Your number: what you think you need to be done, debt-free, and comfortable.
2. The buyer’s number: what they are willing to pay based on earnings, risk, and strategy.
3. The market’s number: the range buyers are paying for similar companies right now.
Valuation work is about getting those three closer together, not pretending they are already the same.
Reality
• Your number is usually based on life goals and relief.
• The buyer’s number is based on data and risk.
• The market’s number is based on deals getting done, not rumor.
Where owners get stuck is assuming that life goals alone will force the market to bend. Buyers do not think that way.
They start with earnings. More specifically, adjusted EBITDA: earnings before interest, taxes, depreciation, and amortization, cleaned up for owner perks and one-time items. Then they look at risk and decide what multiple to put on those earnings.
Here's a snapshot of why private equity keeps moving into HVAC, rolling up service businesses, and targeting HVAC contractors.
Fix It
Start by naming the three numbers instead of mixing them:
• Write down your personal “I would feel safe at this level” number. That is a personal planning input, not a valuation.
• Work with your CPA or advisor to calculate your adjusted EBITDA for the last twelve months. That is the starting point for valuation.
• Talk with someone who sees deals in your size range to understand what multiples are actually being paid for HVAC companies like yours.
You are not trying to get exact down to the dollar. You are trying to get a realistic range.
A simple example
Imagine your business earned $1.3M last year in profit after all expenses. Once you clean it up for valuation, your adjusted EBITDA may look more like $1.5M:
• Add back some personal expenses running through the business.
• Add back one-time hits that are not part of normal operations.
• Adjust for a market-rate salary if you are paying yourself less or more.
If buyers are paying between 4x and 5x for companies like yours, that implies a valuation range of roughly:
• Low end: 4.0 x 1.5M = $6.0M
• High end: 5.0 x 1.5M = $7.5M
Your personal “I want 8 or 9 million” may still be there. The point is that now you know the ground you are standing on, and what it would take to move up inside that range.
Pro Move
Write the three numbers on one page:
• My life number: ______
• My current valuation range: ______ to ______
• The gap: ______
That gap is not a verdict. It is a change list.
Now the question becomes:
“What would we need to improve in this business so that buyers can justify a better multiple or a higher point within that range?”
Quick Win
Before you touch another spreadsheet, schedule one call:
• Either with your CPA, or
• With a buyer-savvy advisor who knows HVAC deals.
Send them your last two years of financials and ask one focused question:
“What do you think a serious buyer would use as my adjusted EBITDA right now?”
You may not love the answer, but you will at least be in reality. That is the only place you can build from.
Many HVAC owners still use revenue as the benchmark.
“We crossed ten million.”
“We doubled in five years.”
Those are good accomplishments. They are not the same as value.
Reality
Buyers care more about:
• The level and quality of earnings.
• How stable those earnings are.
• How expensive it will be to fix what is broken.
Revenue that chews up crews, burns cash, and depends on low-margin installs is not rewarded the same as revenue that comes from healthy service and maintenance work.
A comparison
Consider two shops:
Shop A
• Revenue: $9.0M
• Adjusted EBITDA: $900K (10 percent)
• Heavy on big, one-off projects with razor thin margins.
Shop B
• Revenue: $6.5M
• Adjusted EBITDA: $1.3M (20 percent)
• Strong base of recurring maintenance and service, plus well priced projects.
On paper, Shop A is “bigger.” In reality, most serious buyers will lean toward Shop B:
• Higher earnings.
• Better margin.
• More recurring work.
Put the same multiple on both and the “smaller” shop is worth more:
• Shop A at 4.0x = $3.6M
• Shop B at 4.0x = $5.2M
The contrarian point is simple: Chasing top-line growth without fixing margin and mix can lower your valuation, not raise it.
Fix It
Shift your benchmark from revenue to earnings quality:
• Track adjusted EBITDA over time, not just sales.
• Split your revenue into service, maintenance, and project work.
• Measure gross margin by type of work, not just in total.
Ask yourself:
• Which part of the business produces the most dependable profit per hour of crew time?
• Which part beats up your people and barely pays for the effort?
Pro Move
Start nudging your mix in the direction buyers like before they ever see your numbers:
• Strengthen maintenance agreements and service contracts.
• Be more selective about low-margin projects that create chaos but little profit.
• Adjust pricing where you routinely undercharge for complexity or risk.
You are not trying to become a different company. You are trying to make sure that the work you are already winning turns into the kind of earnings buyers will pay for.
Quick Win
This week, sit down with your latest P&L and job cost reports and answer three questions:
1. What percent of revenue came from service and maintenance last year?
2. What percent of total profit did that work account for?
3. Which project types consistently come in below target margin?
Circle one change you can make in the next ninety days that improves mix or margin just a little. Small improvements now compound into higher value later.
Once buyers understand your earnings, they start looking for reasons to move their multiple up or down. That is where risk shows up.
Reality
Two HVAC companies can have the same adjusted EBITDA and still get very different valuations because of:
• Customer concentration: too much revenue tied to one or two GCs.
• Service versus project mix: too much dependence on big installs.
• Maintenance density: thin recurring base.
• Owner dependence: everything runs through you.
• Documentation and systems: how explainable the machine really is.
Think of risk as a built-in discount on your company.
A simple comparison
Imagine two companies with the same $1.5M in adjusted EBITDA.
Company X
• Top three customers are 55 percent of revenue.
• Revenue heavily weighted to large, competitive projects.
• Owner signs off on most big bids and keeps the key relationships.
• Processes live mostly in experienced heads, not on paper.
Company Y
• Top ten customers are 60 percent of revenue, but none over 12 percent.
• Healthier balance of projects and service work.
• A sales lead owns most of the major relationships.
• Core processes written and used in daily operations.
Even with the same earnings, buyers might think:
• Company X feels like a 4.0x situation.
• Company Y feels like a 5.0x situation.
That is the difference between:
• X: 4.0 x 1.5M = $6.0M
• Y: 5.0 x 1.5M = $7.5M
Nothing “magical” happened at Company Y. They simply turned some of the scarier risk into more understandable, manageable risk.
Fix It
You cannot eliminate risk. You can reduce the parts that scare buyers the most. Start with four lenses:
1. Customer concentration
• What percent of revenue comes from your top five customers?
• How many of those relationships depend mainly on you?
2. Revenue mix
• Service and maintenance versus projects.
• New construction versus retrofit and replacement.
3. Owner dependence
• Which decisions absolutely require your involvement today?
• Which ones could be handed off with support?
4. Systems and documentation
• Can you clearly explain how work moves from lead to cash?
• Do crews work from a consistent playbook or from memory?
Run your shop through those lenses. It will help show you where buyers are likely to apply a discount.
Pro Move
Pick one risk factor where you are clearly in the red and design a one year move:
• Reduce the share of revenue from your largest customer.
• Shift a piece of project volume into recurring service and maintenance.
• Build a small but real leadership spine so not everything depends on you.
You do not need to become perfect. You just need to be less risky than the average company in your space.
Quick Win
Before the week is out:
• Print a simple report of revenue by customer for the last twelve months.
• Highlight any customer over 15 to 20 percent of revenue.
• Ask yourself, “What would happen to my company and my exit if this one customer walked?”
That answer tells you more about your risk profile than any marketing brochure.
Most owners treat valuation like a verdict that happens to them. A buyer shows up. A broker gives an opinion. The number feels like a pass or fail.
That mindset leaves you reactive and tired.
Reality
Valuation is not a one time grade. It is a baseline that you can raise deliberately over a period of years.
• You can improve earnings.
• You can shift your mix.
• You can reduce risk.
• You can make the business more explainable and less dependent on you.
All of those factors show up as:
• A stronger adjusted EBITDA.
• A better multiple.
• A deal structure with more cash and fewer painful conditions.
Fix It
Instead of asking “What is my company worth right now and is that enough?” ask:
“Where would I like this number to be in three to five years, and what is the clearest path to get there without burning out?”
That is the job of an Exit Workplan:
• Take your current earnings, mix, and risk.
• Build a realistic path to better numbers and a better multiple.
• Align the timeline with your personal goals and energy, not just the market.
Pro Move
Treat the next few years as a controlled build toward whatever exit you might want, even if you are not sure you will take it:
• Run the Buyout Potential Scorecard now and once a year.
• Use this valuation toolkit plus the other Exit posts as your playbook.
• Use an Exit Workplan as your project list so value-building work is not random.
If you decide not to sell, you will still own a more profitable, less chaotic business. If you do sell, you will be ready on your terms.
Quick Win
In the next week:
1. Run the Buyout Potential Scorecard to see how a buyer would likely view your shop today.
2. Write down your rough current valuation range based on adjusted EBITDA and multiples in your space.
3. Write down a stretch but believable target range three to five years out.
4. Circle one or two levers from this post that would move you in that direction.
You do not need a perfect map. You need a starting point and the first few clear steps.
Your HVAC company is not worth “what someone else got” or “what you hope for.” It is worth what real earnings, real risk, and real buyers can support.
That should not feel discouraging. It should feel clarifying:
• Earnings quality is a lever you can pull.
• Risk is a lever you can reduce.
• Your role in the business is a lever you can redesign.
Valuation is not out of your hands. It is just out of the hands of rumor.
The number you got today is not your ceiling. It is your starting point. Earnings can improve, risk can shrink, and your role can step out of the daily grind. That gap is a work list you control.
If your situation looks like this, the range is real but it is not enough, start with Am I Actually Ready to Sell My Company?. It shows where buyers will quietly apply discounts, and which fixes raise value fastest.
Then read What’s Really Stalling My Exit: Me Or The Business? if the blocker is not math, but timing and clarity. That piece helps you separate “I’m tired” from “the shop is ready.”
After that, protect yourself on both ends:
• How Do I Exit Without Burning Out? if exit prep is starting to feel like another job on your plate.
• Am I Being Rushed and Lowballed? before you respond to any Letter of Intent.
Run the Buyout Potential Scorecard to see your value story through a buyer lens. When you want a clean sequence to build value on purpose, request your Exit Workplan.
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Smart exits don’t start with a broker, they start with a scorecard. Use this checklist to see if your business is truly ready, or just busy.
Burnout shows you exactly where the business leans on you too hard. Setup weekly owner blocks, hand off 1 choke point, and survive the exit process.
If an exit feels stuck, it is usually uneven readiness. Spot the real blocker and build a shop that clears diligence cleanly, without panic fixes.
Selling your company shouldn’t feel rushed. Here’s how owners protect their valuation, avoid pressure, and stay in control of the process.
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