How much is my business actually worth to a buyer?

Your business is worth what a buyer will pay for it, and that number is determined almost entirely by two things: how much money the business makes, and how confident a buyer is that it will keep making that money after you’re gone. The actual math is straightforward. What makes it complicated is understanding which number to use and what affects the multiplier.

The formula every buyer uses

Value = Earnings × Multiple

That’s it. The calculation itself is simple. The work is in figuring out what “earnings” means and what multiple applies.

What “earnings” means

For most small to mid-size businesses, earnings in a valuation context means Seller’s Discretionary Earnings (SDE), the total financial benefit the owner gets from the business each year.

For larger businesses, typically those with $1 million or more in annual SDE, buyers shift to using EBITDA (earnings before interest, taxes, depreciation, and amortization). EBITDA is better suited to businesses with management teams and operations that don’t depend on a single owner.

For most owners of trades businesses. HVAC, plumbing, roofing, landscaping. SDE is the right starting point.

What multiple applies

This is where most of the variance lives. A business earning $500,000 a year could be worth $1 million or $4 million depending on the multiple, and the multiple is driven by how risky a buyer perceives the business to be.

Lower perceived risk = higher multiple. Higher perceived risk = lower multiple.

These are the main factors that affect where your multiple lands:

What raises your multiple:

• The business runs without you daily, key customers, processes, and decisions don’t depend on the owner personally
• Revenue is spread across many customers (no single customer above 10 to 15% of total)
• Financial records are clean and consistent over 3+ years
• The business has been operating for 10 or more years with stable or growing earnings
• There’s recurring revenue, maintenance agreements, service contracts, retainers
• Licenses and permits transfer cleanly to a new owner

What lowers your multiple:

• The owner is the main salesperson, estimator, or customer-facing contact
• One or two customers make up a large portion of revenue
• Financials are mixed with personal expenses or inconsistent year to year
• Revenue has declined or been volatile in recent years
• The business depends on the owner’s specific technical expertise or license

What businesses in the trades actually sell for

Based on current market data from IBBA, BizBuySell, First Page Sage, and Profitability Partners:

Business type	Typical multiple	Basis
Average Main Street business (any industry)	2.6x SDE	IBBA Market Pulse Q4 2024 (368 brokers, 330 transactions)
Trades business, owner-dependent	2 to 3.5x SDE	BizBuySell / broker consensus
Residential HVAC, $500K to $1M EBITDA	6.3x EBITDA	First Page Sage Q1 2025
Residential HVAC, $1M to $5M EBITDA	9.2x EBITDA	First Page Sage Q1 2025
Roofing, $3M to $10M revenue	5 to 7x EBITDA	Profitability Partners, 2024
Plumbing, under $1M revenue	~2x EBITDA	ClearlyAcquired / broker consensus
Plumbing, $2.5M+ revenue	3x and up	ClearlyAcquired, 2024
Any trades business, strong management team, recurring revenue	7 to 10x EBITDA	PE buyer consensus

The gap between the bottom of that table and the top represents the difference between a business that’s owner-dependent with inconsistent financials and one that’s been intentionally built for transferability. Private equity interest has pushed top-end multiples higher: Axial data shows PE firms went from 8% of HVAC buyers in 2023 to 23% in 2024, increasing competition for quality trades businesses.

The three ways to get a number

1. Ask a business broker for a Broker Opinion of Value (BOV) A BOV is a documented estimate based on your financials and recent comparable sales in your industry. Cost: $500 to $2,500, sometimes free as part of engaging the broker. Appropriate for: early planning, getting oriented before deciding whether to pursue a sale.

2. Ballpark from a CPA A CPA who works with business sales can give you a rough range quickly. Less formal than a BOV, but useful for planning purposes. Typically low cost or included in an existing advisory relationship.

3. Formal certified business valuation A full report from a credentialed valuation specialist (CVA, ABV, or ASA designation). Cost: $3,000 to $10,000 depending on complexity. Required for: estate planning, partnership buy-sell agreements, divorce proceedings, tax purposes, or when you’re close to a real sale.

Most owners planning more than a year out are well served by a BOV. The formal valuation becomes necessary when legal, tax, or deal purposes require a defensible opinion of value.

One number that surprises most owners

The BizBuySell 2024 Insight Report tracked 9,546 closed transactions totaling $7.59 billion in enterprise value. The median sale price for a small business across all industries was $345,000. For building and construction businesses specifically, the median was $760,000. That full-year 2024 total represented a 5% increase in deal volume and a 15% increase in total enterprise value over 2023, both signs of a strengthening market.

Those numbers sound low compared to what most owners expect. The reason: they reflect the middle of all transactions, including businesses sold in distress, businesses that were underprepared, and businesses that were sold at below-market multiples due to timing or circumstance.

A well-prepared business in the trades with clean books, recurring revenue, and a capable team is not competing for the median. It’s competing for the top of the range, and the range goes significantly higher than $760,000 for the right building and construction business.