Question 1

What is the average multiple for home service businesses?

Accepted Answer

The average SDE multiple across all home service verticals is approximately 3.0x–3.5x. HVAC and pest control are above average (3.5x–5x+); painting and flooring are below (2.0x–3.0x). The average shifts based on your vertical, revenue quality, and buyer type.

Question 2

What's the range of multiples in home services?

Accepted Answer

Home service businesses sell for 2.0x–6.0x SDE. The low end (2.0x–2.5x) reflects distressed businesses, high owner dependency, or poor recurring revenue. The high end (5x+) reflects PE-quality businesses with 40%+ recurring revenue, absentee management, and strong growth. Most transactions fall between 2.5x and 4.5x.

Question 3

What single factor has the biggest impact on my multiple?

Accepted Answer

Recurring revenue percentage. Businesses with 40%+ of revenue from maintenance contracts or recurring agreements consistently command 0.5x–1.0x higher multiples than peers with identical SDE but no recurring revenue. No other single factor has as large an impact on the multiple.

Question 4

Does business size affect the multiple?

Accepted Answer

Yes — larger businesses command higher multiples because they have more buyers (PE can participate) and lower risk (management teams exist). A $1M SDE business might get 4.0x while a $200K SDE business in the same vertical gets 2.75x. Size is correlated with professionalization, which is what buyers are actually paying for.

Question 5

What is the SDE vs. EBITDA multiple difference?

Accepted Answer

SDE multiples are lower than EBITDA multiples on a numerical basis — but they're applied to a higher number (SDE > EBITDA for owner-operated businesses). A 3.5x SDE multiple and a 6.0x EBITDA multiple often produce similar valuations for the same business, because SDE includes the owner salary while EBITDA doesn't.

Question 6

How does growth trend affect my multiple?

Accepted Answer

Revenue growing 15%+ per year commands a 0.25x–0.5x multiple premium. Flat revenue (0–5% growth) trades at market. Declining revenue (year-over-year) triggers a 0.5x–1.0x discount because buyers price in continued decline. Three years of consistent growth is the ideal presentation.

Question 7

Does customer concentration affect the multiple?

Accepted Answer

Yes — heavily. A single customer representing 30%+ of revenue will cause most buyers to apply a 0.5x–0.75x discount or require a post-closing escrow tied to that customer's retention. Buyers price customer concentration risk into the deal. Diversifying your revenue before selling is one of the highest-ROI exit prep actions.

Question 8

What's the difference between a PE multiple and an individual buyer multiple?

Accepted Answer

PE buyers use EBITDA multiples (5x–10x) and are analyzing your business as a platform investment. Individual buyers use SDE multiples (2.5x–4.5x) and are analyzing how much they can earn as an owner-operator. The same business can produce different valuations from different buyer types — which is why running a competitive process with multiple buyer types matters.

Question 9

Can I negotiate the multiple?

Accepted Answer

You negotiate price, not the multiple explicitly. But since price = SDE × multiple, everything is negotiable. The way to maximize your multiple is competitive pressure — multiple buyers bidding simultaneously. A broker who can create that dynamic consistently achieves 0.5x–1.0x higher multiples than sellers who negotiate with a single buyer.

Question 10

What kills a multiple mid-process?

Accepted Answer

Common mid-process multiple reducers: financials don't match what was initially presented, key employees leave during diligence, a large customer cancels, undisclosed legal or regulatory issues surface, or the trailing 12-month performance drops significantly after the LOI is signed. Transparency upfront prevents these surprises.

Question 11

Do multiples vary by geography?

Accepted Answer

Modestly. High-growth sunbelt markets (Texas, Florida, Arizona) can see slightly higher multiples due to business growth potential and PE platform density. But vertical and revenue quality matter far more than geography. A strong HVAC business in Iowa gets similar multiples to a comparable business in Texas.

Question 12

What can I do in the next 12 months to increase my multiple?

Accepted Answer

Ranked by impact: (1) Build a maintenance agreement program (adds 0.3x–0.8x). (2) Reduce owner hours to under 25/week (adds 0.5x–1.0x). (3) Grow revenue 15%+ (adds 0.25x–0.5x). (4) Document your processes and SOPs. (5) Implement field service software. Doing all five can realistically add 1.0x–2.0x to your multiple.

Business Valuation Multiples: 12 Questions Answered

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