What Multiple Does an HVAC Business Sell For, and Why Yours Differs

The RangeA multiple of adjusted EBITDA, and why the band is wide

Owner-managed UK HVAC businesses generally change hands at a multiple of adjusted EBITDA, with contract-rich operators at the top of the band and project-led businesses at the bottom. That is not a promise, and the width of the band is the point: a business at the bottom of it and a business at the top are not haggling over the same asset, they are different assets that happen to be in the same trade.

I would treat any adviser who quotes a single sector number without asking about your income mix with some caution.

The base figure matters as much as the multiple and gets less attention. Adjusted EBITDA is your profit with the owner's remuneration normalised to a market salary, personal costs removed, and genuinely non-recurring items stripped out. Two businesses can agree on a multiple and still be a long way apart on price because they disagree about the adjustments, and the adjustments are argued in diligence rather than at heads of terms.

The MechanismFour things that decide where in the band you land

Recurring share is the largest single lever. The proportion of revenue under a maintenance or service agreement tells the buyer how much of next year exists already, and it is the first number in every screening conversation. Movement here moves the multiple more than movement in turnover does, which is why growing the contract book is better preparation than growing the business.

Contract quality is the second, and it modifies the first. A three-year agreement with an annual uplift and no consent requirement on a change of ownership is a different asset from a rolling annual arrangement terminable on a month's notice, even at the same annual value. Length, notice period and assignability are read line by line by the buyer's solicitor, and they are worth reading yourself first.

Customer concentration is the third and it works only downwards. One customer at a third of revenue caps where you can sit in the band regardless of how good the rest of the business is, because the buyer is pricing the day that customer goes to tender. Spread is slow to build and there is no shortcut, which is the argument for starting before you need to.

Certified capability is the fourth, and in this trade it has become a competitive differentiator rather than a hygiene factor. F-Gas certified engineers, MCS accreditation with commissioned installations behind it, and a team that stays, are all things an acquirer would otherwise have to build over years in a market where recruitment is the binding constraint.

Movement in the recurring share moves the multiple more than movement in turnover does, which is why growing the contract book beats growing the business.

The CautionWhat a published range cannot tell you

Size affects the multiple independently of everything above. Larger businesses attract buyers with institutional money and a platform strategy, smaller ones attract trade buyers and management teams, and those buyer groups simply pay differently. A business at £400,000 of adjusted EBITDA and one at £1.2m can be identical in every respect discussed here and still transact at different multiples.

Deal structure then moves the effective number again. A headline multiple with half the consideration deferred over three years and contingent on performance is not the same as a lower multiple paid at completion, and an owner who compares the two on the headline alone discovers what the difference was worth only when the deferred element falls due. Ask what is paid when, before asking what the multiple was.

Which is the argument for getting a range on your own figures rather than reading someone else's. The published band is orientation. The number that matters is the one produced by your own recurring share, your own contracts, your own concentration and your own team, and it is knowable without committing to anything.