The guide
The short answer
To sell an HVAC, plumbing or electrical business, show buyers what they pay for: recurring service-agreement revenue, licensed technicians who will stay, a business that doesn't depend on your license or relationships, and books a lender can verify. In HVAC, private-equity-backed groups are active buyers. A buyer with an SBA loan limits your role after the sale.
Why do buyers want HVAC, plumbing and electrical businesses?
Capstone Partners says demand has grown for maintenance-focused providers with recurring revenue and repeat customers, as more installed systems reach repair or replacement age. It counted 47 HVAC deals by private-equity sponsors so far in 2026, against 46 a year earlier. Its update covers HVAC only. For the trades as a whole, IBBA's Q2 2026 advisor survey put construction and specialty trades among the strongest sectors for buyer interest (sentiment, not completed deals).
What do buyers look for?
1. Service agreements and repeat revenue
Capstone says acquirers want recurring revenue, and maintenance plans are the clearest example: predictable, and owned by the business, not you. Know how many you have, what they bring in and how many renew each year.
2. Technicians who will stay
A buyer wants to know how long your licensed technicians have been with you, how they are paid and whether they will stay. High turnover can lower the price.
3. A business that isn't you
Whose license does the business run under? In some states, such as California, it rests on a named qualifier (the licensed person behind it). If that person leaves, the board must be told, and a replacement named, within 90 days (one extension is possible), or the license or classification is suspended. California also says a sole owner's license can't be included in a sale: the buyer applies for their own. If the license rests on you, solve that before you sell, and ask your licensing board how your state works.
Beyond the license, the usual tests apply: who quotes the big jobs, who the commercial accounts call, who dispatches.
4. Clean books, and job-level numbers
Small-business accounts are prepared for tax reporting, not to show a buyer the cash flow available to an owner. Recasting presents the same records in the way buyers and lenders assess them. Buyers want three years that tie to your tax returns, with documented add-backs. An add-back is a cost that wouldn't continue under a new owner, such as the owner's personal truck. Have margin by type of work (service versus new construction), average ticket and revenue per technician ready too.
5. Customers, equipment and premises
A customer list in a field-service system, with equipment age and service history, is something a buyer can market to. Paper invoices aren't. If one builder or property manager is a third of your revenue, expect questions. Also list your vehicles with age, mileage and condition, and check that the shop lease can be assigned.
What differs between HVAC, plumbing and electrical?
HVAC. Technicians who maintain, service or repair equipment that could release refrigerants must hold EPA Section 608 certification. Apprentices closely supervised by a certified technician are exempt, and certificates do not expire. A buyer may ask how many of yours hold one.
Plumbing. If you mix service calls, remodels and new construction, expect questions on the split, on emergency calls and on who holds the license.
Electrical. Expect questions on your backlog (signed work not yet done), your bonding and insurance, and reliance on a few contractors. Ask your surety (the company behind your bonds) and insurance broker early what a change of ownership does to both.
How much is an HVAC, plumbing or electrical business worth?
Small businesses are priced as a multiple of earnings. The IBBA and M&A Source Market Pulse for Q2 2026 reports them by purchase price, without an industry split, so it gives none for the trades alone. The first column is the price a buyer pays, not your yearly revenue.
| Purchase price | Multiple of | Q2 2026 |
|---|---|---|
| Under $500,000 | SDE | 2.0 |
| $500,000 to $1 million | SDE | 2.8 |
| $1 million to $2 million | SDE | 3.1 |
| $2 million to $5 million | EBITDA | 4.0 |
| $5 million to $50 million | EBITDA | 5.8 |
Smaller deals use seller's discretionary earnings (SDE), which counts all of the owner's pay as profit. Larger ones use EBITDA (earnings before interest, taxes, depreciation and amortization), which first treats a market wage for the owner's job as a cost: see SDE vs EBITDA.
For example, $300,000 of SDE at 2.8 times is about $840,000. That is an illustration, not a valuation: see what is my small business worth?
Capstone's HVAC report quotes higher figures: 9.5 times EBITDA on average from 2024 to date in 2026, down from 13.3 times in 2021 to 2023. Treat that as a headline, not your price.
Who buys an HVAC, plumbing or electrical business?
| Buyer | What to expect |
|---|---|
| Private-equity-backed group (owned by an investment firm; best documented in HVAC) | Wants recurring revenue and a team that stays. May ask you to stay for a transition and keep a share. Expect a detailed check of your records (due diligence). |
| Local competitor | May only want the customers and technicians. Confidentiality is a bigger worry, because they compete with you. |
| Key employee | Continuity for staff and customers. May need a loan and seller financing (a seller note: you let the buyer pay part of the price later). |
| Individual buyer | Depends on your transition plan and team. May use an SBA loan, in which case the lender checks your books against your tax records. |
Selling to private equity: what does the buyer ask for?
A private-equity-backed group buys one business to build around, then adds local firms. The industry calls the first purchase a platform and the later ones add-ons. Capstone says its HVAC deal activity so far in 2026 has been dominated by add-on acquisitions. Two topics tend to come up:
- Rollover equity. You keep part of the price as a share of the buyer's company instead of cash. If the group later sells, your share is sold with it and may be worth more or less than at closing. IBBA's survey, which has no industry split, shows retained equity at 4% of deal value for sales of $5 million to $50 million in Q2 2026, none shown below that. Ask how it is valued and when you could sell. Your lawyer and CPA can say how it is taxed.
- Part of the price tied to later results. That is an earn-out: 7% of deal value in the same deal-size band.
What changes if the buyer uses an SBA loan?
Some buyers pay with an SBA 7(a) loan, and the lender must then follow SOP 50 10 8.1, effective October 1, 2026. For a buyer new to the business, the usual case:
- You can't stay on as an officer, director, stockholder or employee, only as a consultant for up to 24 months in total. If your license rests on you, the buyer will need its own qualifier in place; ask your licensing board how that works.
- Earn-outs are not allowed.
- A seller note counts toward the buyer's required equity only on full standby, meaning no payments while the SBA loan lasts. The buyer must put in at least 10% of the total project cost (the price plus the other costs of getting the business running). For example, on $1,000,000 of project cost that is $100,000, and a seller note on full standby, with other limited sources such as a standby loan from someone else, can supply at most half of it, $50,000.
- The lender checks your numbers. It compares your statements with your IRS tax records. Above a $350,000 business price it needs a valuation prepared for it by an accredited, independent appraiser (at or below that, the lender may do its own, unless the buyer and seller have a close relationship). At $3 million or more, not counting any building sold with it, it also orders a quality of earnings report, an independent financial professional's check of your earnings.
Selling to a buyer with an SBA loan covers other cases, such as a buyer who has worked at the business for 24 months or more.
Six things to do in the next six months
- Count your service agreements and work out the renewal rate.
- Sort out the license: who holds it, and what happens if they leave.
- Recast three years of financials and document every add-back (see item 4 above).
- Put customer and equipment records in one system, and gather the documents buyers and lenders ask for.
- Hand dispatch, quoting or a major account to someone else.
- Talk to a broker who sells trades businesses, so you know what buyers in your area pay (broker or by owner).
Selling is a year or more away? Start with exit planning. About to list? How to sell a small business sets out the steps in order.
See where your business stands
Our free readiness score takes about ten minutes. Fourteen questions, scored the way a buyer would weigh them, with the three gaps most worth fixing. Nothing you enter is shared with anyone.
Keep reading
- How to sell a small business: the steps, in order
- How to make your business run without you
- What is my business worth? How to value a business for sale
This guide is general information, not tax, legal or valuation advice. Every business is different: talk to your accountant, lawyer and broker about yours.