The multiple is the easy part. What drives it is the real question.
Ask around and you'll hear a range for what a heating and air conditioning business sells for — something in the neighborhood of 3x to 6x EBITDA, depending on who you ask and when. That range is real, but it's also close to useless on its own, because the gap between the bottom and the top of it is enormous in dollar terms, and what determines where a specific business lands in that range is rarely the thing owners spend the most time worrying about.
Start from adjusted EBITDA, not revenue
Buyers don't pay for revenue. They pay for adjusted EBITDA — reported earnings with legitimate, documented add-backs for owner-specific expenses a new owner wouldn't carry (an above-market owner salary added back to market rate, a genuinely one-time expense, a personal vehicle run through the business).
The word doing the work in that sentence is documented. An add-back you can't support with paperwork isn't an add-back a buyer's diligence team will accept — it's a number that gets negotiated back out of the deal, usually at the worst possible moment. The Numbers Primer walks through gross profit, margin, EBITDA, and adjusted EBITDA with worked examples, and it's worth understanding before you ever quote a number to a buyer.
What actually moves the multiple
Two businesses with identical adjusted EBITDA can sell for meaningfully different multiples. The difference is usually one or more of these:
Revenue mix. A business with a real base of recurring maintenance-agreement revenue is worth more per dollar of EBITDA than one running entirely on one-off calls, because the recurring base is more predictable for a buyer to underwrite.
Customer concentration. A business where no single customer or contract represents an outsized share of revenue is lower-risk, and lower risk supports a higher multiple.
Key-man risk. If the pricing knowledge, the customer relationships, and the operational decisions all live in one person's head — usually the owner's — a buyer is pricing in the risk of that knowledge walking out the door. Documented systems and a team that can run without the owner in every decision reduce that risk and support a higher multiple.
Platform and reporting quality. A business that can produce a real per-truck P&L, a real booking rate, and a real callback rate in minutes is demonstrably better understood — by the owner and by a buyer's diligence team — than one running on blended averages and gut feel. That transparency is worth something concrete at the negotiating table, not just operationally.
Clean books. Financials that hold up without extensive normalization are faster to diligence and lower-risk to underwrite, both of which support the multiple.
The pattern underneath all of it
Every one of those levers is really the same lever, viewed from different angles: does the business run on documented, provable systems, or does it run on the owner's judgment and institutional memory? The first is a business a buyer can underwrite with confidence. The second is a business a buyer has to discount for the uncertainty.
Getting an honest read on where your own numbers and systems actually stand — not against a rule of thumb, but against your specific instance and your specific operating gaps — is what the ServiceTitan Operating Audit is built to produce: a written baseline covering booking rate, callback attribution, pricebook integrity, membership configuration, reporting gaps, and the accounting seam. Whether you're planning an exit in two years or twenty, that baseline is the same thing a buyer will eventually be checking.
This is IronMargin operational education, not legal, accounting, tax, or employment-law advice. See the disclaimer.
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