There is no single HVAC multiple that survives a platform reset.
There is no single HVAC multiple that survives a platform reset. Published services M&A updates for 2024 through mid-2026 reported averages near 2.0 times revenue and 9.5 times EBITDA, below earlier-cycle prints near 2.3 times and 13.3 times. Those are portfolio and sponsor averages, not a quote for a one-to-five-million-dollar owner-operator. A planning review starts with SDE versus manager-loaded EBITDA. It is not a certified appraisal or a sale-price guarantee.
What to know before using the headline number
- Published 2024 through mid-2026 HVAC services averages near 2.0 times revenue and 9.5 times EBITDA are sponsor-scale captions, not owner-operator quotes.
- Earlier-cycle prints near 2.3 times revenue and 13.3 times EBITDA describe a different money cost and a different platform race.
- SDE and manager-loaded EBITDA answer different buyer jobs. Mixing them is how a tuck-in inherits a platform factor.
- NAICS 238220 is a wide trade. Mix, agreements, and owner hours decide which HVAC business you actually have.
- A reset shows up in terms as well as in the factor: more paper, more holdbacks, and more insistence on a manager already in the cost.
A sponsor average is not your truck-and-tech shop
Published HVAC services M&A updates for 2024 through mid-2026 described average consideration near 2.0 times revenue and 9.5 times EBITDA, compared with higher 2021 through 2023 averages near 2.3 times and 13.3 times. Deal count in those updates sat around 92 year-to-date through early July, with add-ons outnumbering new platforms. Those figures are useful as a cycle caption. They are not a factor you can drop onto a working-owner shop.
The Census Bureau’s North American Industry Classification System places plumbing, heating, and air-conditioning contractors in NAICS 238220. That code covers residential service, commercial install, new construction, and refrigeration work that do not share the same risk. County Business Patterns can show establishment and payroll context by geography. Neither series is a transaction multiple.
SDE and manager-loaded EBITDA are different jobs
Seller’s discretionary earnings is the recast benefit to a full-time working owner. Adjusted EBITDA usually assumes a paid market manager and is the language platforms use. Applying a 9.5 times EBITDA factor to uncorrected owner-operator SDE is a classification error. The IBBA glossary treats discretionary earnings as a defined stream after specified adjustments. If the adjustments omit the manager, the factor inherits the omission.
Bureau of Labor Statistics Occupational Employment and Wage Statistics is the public starting point for replacement wages. Local duties still require judgment. A buyer who must hire a general manager, a dispatcher, and a lead installer is not buying the same earnings the owner took home. Insert those wages before anyone reaches for a platform print.
Revenue Ruling 59-60 still asks which HVAC business you have
The IRS valuation job aid reprints Revenue Ruling 59-60. Nature of the business, earning capacity, financial condition, and similar-interest prices are the questions. A maintenance-agreement book with documented renewal is not similar to a new-construction crew that lives on two builders. A commercial controls shop is not similar to a residential changeout route. If the comparable set mixes those models, the average is noise.
SBA acquisition guidance still places valuation beside diligence, agreements, and professional support. For an HVAC file that means job-cost integrity, technician roster, warranty reserves, and whether the owner is the rainmaker. A platform multiple that never inspected those items is a caption from someone else’s portfolio.
Service agreements, mix, and the owner in the van
Recurring maintenance can support a higher quality of earnings when contracts, renewals, and collections can be rebuilt. A binder of unsigned “members” cannot. Split install, service, and new construction. Margin and concentration differ. One builder or one property manager can be a hidden key-person risk even when the trucks look busy.
Inventory, tools, and vehicles are part of the going concern. They are not a second full value stacked on an earnings multiple unless the deal is structured that way. Near-term truck replacement and refrigerant-handling compliance belong in the cash model. Buyers price downtime and catch-up capital. They do not treat a smooth depreciation line as a substitute.
Reset means terms as much as it means the factor
When platform prints cool, add-on buyers still bid. They bid with more paper, more holdbacks, and more insistence on a manager already in the cost structure. Restate any indication as cash at close versus deferred consideration. A 9.5 times story that is half note is not the same indication as cash.
An owner-operator sale to an SBA-financed buyer lives on SDE and coverage, not on a sponsor EBITDA print. Use the platform reset as a reminder that folklore faded. Then value the shop in front of you. A planning review can keep those lanes separate. It cannot turn a tuck-in into a platform.
Tests that keep a platform print off a working-owner shop
Identify the economic activity, the earnings construct, and the buyer type before anyone multiplies. The cycle caption comes last.
| Issue | What the owner should assemble | What a buyer is likely to test | Why it changes the decision |
|---|---|---|---|
| Earnings construct | Recast tied to job cost, with a named SDE total and a separate manager-loaded EBITDA total. | Reject any factor that was published on the other construct. | A 9.5 times EBITDA print on uncorrected SDE overstates the shop immediately. |
| Replacement labor | Role map for owner hours and a wage check against Occupational Employment and Wage Statistics. | Insert a general manager and any missing dispatcher or lead tech the buyer must hire. | Platform EBITDA already assumes that payroll. Owner SDE often does not. |
| Mix and recurrence | Install versus service versus new construction, plus a maintenance-agreement cohort that ties to collections. | Drop unsigned “members” and stress the largest builder or property-manager account. | A blended trade multiple hides the risk that actually exists. |
| Industry identity | NAICS-consistent description and, if useful, County Business Patterns context for the local trade. | Remove comparables from a different HVAC model even if all are coded 238220. | Residential changeouts are not commercial controls. The average of both is not a shop. |
| Capital and terms | Truck and tool age, known replacements, and a cash-versus-note restatement of any indication. | Deduct near-term capex and haircut paper. | A cooled platform print that is half note is still not cash at close. |
Worked example: a $4.2 million shop quoted 9.5 times on owner SDE
This example is hypothetical. A residential HVAC owner reports $4,200,000 of revenue and claims $680,000 of SDE. An adviser applies 9.5 times because “that is where HVAC trades now.” The owner still runs dispatch and sells most replacements. Related-party shop rent is $3,800 a month against a supportable $7,100. Two vans are due for replacement within a year at about $92,000 combined. Maintenance agreements are 410 names; 90 have not paid in six months.
| Item | Amount | What the 9.5 times assumed | Bridge treatment |
|---|---|---|---|
| Claimed SDE | $680,000 | 9.5 times equals $6,460,000 | Starting claim only |
| Manager and dispatch replacement | $95,000 | Owner labor treated as free | Insert market payroll |
| Rent reset | $39,600 | Below-market occupancy treated as durable | Bring to market |
| Unpaid agreement names | $22,000 | Counted as recurring profit | Remove until collections exist |
| Near-term van capital | $92,000 | Ignored by the earnings factor | Price or reserve item |
| Manager-loaded run rate | $523,400 | Never computed | Buyer-relevant EBITDA-like base before vans |
After a manager-and-dispatch wage, a rent reset, and removal of unpaid agreement profit, claimed $680,000 becomes about $523,400 before van cash. The 9.5 times slogan on the uncorrected SDE implied $6,460,000. The same slogan on the corrected base would have implied about $4,972,000 before vans. Those are not neighboring answers. They also still misuse a sponsor EBITDA print on a working-owner shop.
Published mid-cycle HVAC services averages near 9.5 times EBITDA and 2.0 times revenue described portfolios and add-ons, with deal counts around 92 through early July and add-ons outnumbering new platforms. A $4.2 million owner-operator is not that perimeter. An SBA-financed buyer would likely stay on SDE after a real wage and would not start at 9.5 times. A platform add-on buyer would start from manager-loaded EBITDA and then argue mix, density, and terms.
The $92,000 vans are not an add-back. They are cash required to keep revenue. Some buyers deduct them. Some reserve them. Either way, the slogan that skipped them was incomplete. Revenue Ruling 59-60 still asks for this company’s earning capacity, not last year’s platform average.
Value the shop, then glance at the platform caption
Keep sponsor prints in a footnote until the construct, mix, and labor file exist.
- 01
Write the HVAC you actually operate
State residential versus commercial, install versus service, and whether new construction dominates. Use NAICS 238220 as a label, not as a comparable set.
Deliverable: One-page activity and mix memo
- 02
Build two earnings totals
Produce documented SDE and a separate manager-loaded figure. Do not let anyone multiply the wrong one.
Deliverable: Dual-construct earnings bridge
- 03
Cost the owner out of the vans and the phone
Map hours and price replacement roles with a public wage starting point from Occupational Employment and Wage Statistics.
Deliverable: Role-and-wage schedule
- 04
Age the agreement book
Export paid maintenance agreements, renewals, and cancellations. Tie them to collections. Drop unpaid names.
Deliverable: Agreement-to-cash cohort
- 05
Schedule trucks and tools
List vehicles and major tools by age and known replacement. Convert the next year into cash.
Deliverable: Twelve-month capex calendar
- 06
Match the factor to the buyer
Use SDE language for an owner-operator or 7(a) buyer. Use manager-loaded EBITDA only for a buyer who already priced a manager. Glance at platform averages last.
Deliverable: Buyer-matched indication memo
Where otherwise credible analyses break down
Dropping a 9.5 times EBITDA print onto owner SDE
Why it matters: You capitalize unpaid owner hours and a sponsor-scale average at the same time.
Better approach: Separate the constructs, then choose a factor that matches the actual bidder.
Treating every 238220 contractor as a comparable
Why it matters: New construction, commercial controls, and residential service do not share the same risk.
Better approach: Match mix and customer type before you match the trade name.
Counting unpaid maintenance names as recurring earnings
Why it matters: A roster is not a cohort. Buyers pay for collected renewals.
Better approach: Age the book and tie it to cash.
Ignoring a cooled cycle’s terms
Why it matters: Add-on buyers still bid, but more of the headline may be paper or holdback.
Better approach: Restate every indication as cash at close.
What a defensible owner decision looks like
Platform HVAC prints reset because money got more expensive and add-ons became the common trade. That history is a caption. It is not a quote for a working-owner shop in NAICS 238220. Value the earnings a buyer can inherit after a market manager, a rent reset, and a real agreement book. Then decide whether the bidder is a financed owner-operator or a density buyer.
I would rather show a smaller, construct-correct range than flatter an owner with last cycle’s 13.3 times story. A planning review can keep those lanes straight. It is not a certified appraisal and it will not turn a tuck-in into a platform.
Questions owners ask
Can I apply 9.5 times EBITDA to my HVAC company’s SDE?
No. That mixes two earnings constructs and a sponsor-scale average. Recast first, insert a market manager if the buyer will need one, then choose a factor that matches the actual buyer pool.
Do add-on deal counts prove my shop will sell at a platform multiple?
No. Add-on volume shows that buyers exist. Your price still follows documented earnings, mix, transfer, and capital needs.
Is this a certified appraisal of an HVAC contractor?
No. This is educational planning. A certified or purpose-specific appraisal is a separate product with different procedures and reporting.
Should I use a revenue multiple because 2.0 times was published?
Only as a later sanity check after margin, mix, and labor are known. Revenue can hide a parts-heavy or builder-heavy shop.
What if a platform already sent an indication?
Restate it as cash, notes, holdbacks, and the manager they assume. Compare that stack with an owner-operator path before you react to the factor.
Do plumbing and electrical shops use the same logic?
The construct problem is the same: SDE versus manager-loaded EBITDA, mix, and owner hours. The comparable set is not the same. Keep the trades separate.
Sources and review date
Last reviewed: September 3, 2026. Sources are linked for context; a national benchmark is not a substitute for local comparable sales or a purpose-specific appraisal.
- U.S. Census Bureau: North American Industry Classification System — Official industry definitions used to separate economically different operating models before selecting comparable data.
- U.S. Bureau of Labor Statistics: Occupational Employment and Wage Statistics — A public starting point for testing market-rate replacement compensation; local duties and labor markets still require judgment.
- IRS valuation job aid and Revenue Ruling 59-60 — Appendix A reproduces Revenue Ruling 59-60 and its closely held business valuation factors; the job aid itself states that it is not legal authority.
- U.S. Small Business Administration: Merge and acquire businesses — Owner-oriented guidance on valuation, agreements, due diligence, and professional support in an acquisition.
- International Business Brokers Association glossary — Professional definitions for SDE, transaction terms, and Main Street business brokerage concepts.
- U.S. Census Bureau: County Business Patterns — Public establishment, employment, and payroll context by industry and geography; not a source of transaction multiples.
- SBA SOP 50 10 lender and development company loan programs — Current SBA lending procedures; financing rules can affect valuation scope, equity injection, seller debt, and change-of-ownership underwriting.