SDE vs. EBITDA: When Does the Multiplier Basis Shift?
In business brokerage and mergers & acquisitions (M&A), the benchmark metric depends on transaction size:
- Under $1M in Adjusted Profit (SDE): Most owner-operator HVAC businesses are priced as a multiple of Seller's Discretionary Earnings (SDE). Current Florida market multiples typically range between 2.5x to 4.2x SDE.
- Over $1M in Adjusted Profit (EBITDA): When a mechanical business has dedicated general managers, dispatch directors, and leadership teams that run without the owner's daily intervention, buyers value the business on EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Multiples range from 4.5x to 8.0x+ EBITDA when courting private equity platforms.
What Drives Your Multiple to the Top of the Range?
Buyers don't just pay for past profits; they pay for the certainty and transferability of future cash flows. The following elements reliably push HVAC valuation multiples toward the premium end:
High Multiple Drivers (3.5x - 5.0x+)
- • 1,500+ active recurring maintenance contracts
- • Fully staffed with licensed, tenured technicians
- • Clean, GAAP-compliant financial records
- • Strong residential replacement margins (>50%)
- • Owner works <15 hours/week on strategy only
Multiple Discount Drivers (2.0x - 2.8x)
- • Owner holds license and runs primary service calls
- • Heavy reliance on low-margin new construction
- • High technician turnover and fleet wear
- • No formal maintenance agreement base
- • Customer concentration (>20% with one client)
The Florida Market Premium
Florida HVAC companies consistently trade at a 15% to 25% premium compared to Midwest or Northern counterparts. Why? Year-round cooling demand eliminates the deep winter revenue troughs seen in cold climates, providing private equity platforms with uninterrupted quarterly returns.
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