# How to sell a trades business — the complete owner's guide

> A free, plain-English guide to selling an HVAC, plumbing, electrical, roofing, pool-service, pest-control, or landscaping business: what it is worth, how buyers structure payment, how the proceeds are taxed, and the full process step by step.

**Canonical URL:** https://chiselindustries.com/selling-a-business  
**Publisher:** Chisel Industries (https://chiselindustries.com)  
**Last updated:** 2026-06-26

## Key facts

- **Typical valuation range:** 3×–10× annual earnings — SDE for smaller owner-operator shops, EBITDA for larger systematized businesses
- **Typical time to close:** 3–6 months — LOI 2–4 weeks, diligence 30–60 days, docs and funding 2–4 weeks
- **Typical cash at closing:** 50–70% of price
- **Typical broker fee if you use one:** 8–12% of sale price

## What a trades business is worth

Value is earnings multiplied by a multiple. Smaller owner-operator shops are
valued on SDE (Seller's Discretionary Earnings) and trade nearer 2×–4×; larger,
systematized businesses with recurring revenue are valued on EBITDA and reach
5×–10× or more.

By trade:

- **HVAC: 4–10× EBITDA** — The hottest trade for buyers. Maintenance plans and replacement demand drive premium multiples; platform-scale shops reach the top of the range.
- **Plumbing: 4–9× EBITDA** — Strong, steady demand and good recurring-service potential. Drain and water-heater programs lift the number.
- **Electrical: 4–8× EBITDA** — Residential service and recurring commercial contracts are prized. Project-only shops trade lower than service-heavy ones.
- **Pool & spa service: 3.5–7× EBITDA** — Route density and recurring monthly service are gold. Construction-heavy revenue is valued more cautiously than service.
- **Pest control: 5–9× EBITDA** — Among the most recurring of all trades — high contract renewal rates earn some of the strongest multiples in home services.
- **Roofing: 3–6× EBITDA** — More cyclical and project-based, so multiples run lower unless you have strong repair/maintenance and a durable lead engine.
- **Landscaping & lawn: 3.5–7× EBITDA** — Recurring maintenance contracts trade well; design-build and seasonal work are valued lower than year-round service.
- **Garage, doors & other: 3–6× EBITDA** — Varies widely with recurring revenue, brand strength, and how dependent the business is on the owner.

## What moves the multiple

Upward:

- **Recurring revenue** — Maintenance plans and service agreements are the single biggest lever. Predictable future cash flow is exactly what buyers pay a premium for.
- **Runs without you** — If the business can operate while you take a two-week vacation, it's worth more. Owner dependency is the #1 thing that pulls a multiple down — so removing it pulls it up.
- **Clean financials** — Three years of organized, consistent books with no surprises in due diligence. Clean records build trust and speed closing.
- **Diversified customers** — No single customer is more than ~10–15% of revenue. Spread-out demand is durable demand.
- **Strong team in place** — Long-tenured techs, a real ops lead, a field supervisor. A team that stays is a business that survives the handoff.
- **Growing revenue** — Buyers pay for momentum. A business growing 15%+ a year commands a meaningfully higher multiple than a flat one.

Downward:

- **Heavy owner dependency** — You hold every customer relationship, do all the estimates, and field every escalation. The most common reason multiples drop.
- **Customer concentration** — One commercial client at 30% of revenue is a risk the buyer prices in heavily — if they leave after close, the investment goes with them.
- **Messy books** — Inconsistent records, missing invoices, unclear owner expenses. They slow diligence and give buyers a reason to chip the price.
- **Aging equipment** — Deferred maintenance on the fleet or tools reads as future cost. Buyers discount for capital they'll have to spend right away.
- **High turnover** — Cycling through techs signals training cost, lower productivity, and culture risk. Retention is value.
- **Handshake agreements** — Verbal customer terms, informal employee arrangements, undocumented vendor deals. Buyers want paper — formalize what you can.

## How buyers pay

The headline price is not the number that matters most; the structure is.

- **Cash at closing (Typically 50–70%)** — Money wired to you the day the deal closes — the part you keep no matter what happens next. This is what most owners care about most, and rightly so. *Watch:* A higher headline price with less cash at close can be worth less than a lower price that's mostly cash. Always look at the cash-at-close number, not just the total.
- **Seller note (Often 10–20%)** — You finance part of the price yourself: the buyer pays you over time (commonly 3–7 years) with interest. It can raise your total price and signals you believe in the business. *Watch:* You're now a lender. Understand the interest rate, the term, what happens if the buyer struggles, and where you sit if other lenders are involved (your note may be 'on standby').
- **Earnout (Often 10–25%)** — A slice of the price tied to the business hitting future targets (revenue or profit) over 1–3 years. It bridges a gap when you and the buyer see the future differently. *Watch:* You're betting on results you may no longer fully control. Tie it to simple, measurable numbers, get clarity on how the business will be run, and never count on earnout money as a sure thing.
- **Rollover equity (Sometimes 15–30%)** — Instead of cashing out fully, you keep a stake in the larger business going forward. If the new owner grows it, your remaining slice can become a 'second bite at the apple' worth real money. *Watch:* It's an investment, not cash. You're trusting the new operator and the structure above you. Understand the terms, the timeline to a future sale, and what could go wrong.

## Who buys trades businesses

- **Individual buyer / searcher** — One person (often using an SBA loan) buying a business to own and run themselves. Frequently a first-time owner. *Good:* Can be a great cultural fit and will likely keep the business much as it is. Personal, hands-on. *Watch:* Deals hinge on financing and the buyer's nerve. More can fall through. They usually need a lot of seller training and often a seller note.
- **Private-equity platform** — A PE firm building a large company by buying a first 'platform' business in your trade and region. *Good:* Pays the strongest multiples, moves professionally, and has real money. Good if you want maximum price. *Watch:* They will install their systems and reporting. Your brand and team may change. Lots of diligence.
- **PE add-on / roll-up** — A PE-backed company already operating in your trade, adding your business to their group. *Good:* Fast, experienced, knows the trade, and can offer rollover equity for a 'second bite.' *Watch:* You become one of many. Local autonomy varies a lot — ask exactly what changes day one.
- **Strategic acquirer** — A larger competitor or adjacent company that wants your customers, territory, or crews. *Good:* May pay up for 'synergies.' Knows the business and can move quickly. *Watch:* Most likely to fold operations together — which can mean redundancies for your team.
- **Holding company (like Chisel)** — A long-term owner that buys good businesses and keeps running them — name, crew, and all. *Good:* Built for legacy: long hold, no flip, often keeps the team and brand intact. Direct deal, no broker. *Watch:* Make sure the long-term promise is real. Ask how they've treated past acquisitions and their people.
- **Your team or family** — An internal sale to a key employee, a management group, or the next generation — sometimes via an ESOP. *Good:* Best cultural continuity. Your people and customers barely feel a change. *Watch:* Usually the lowest price and the most seller financing. Insiders rarely have outside capital.

## Taxes

- **Asset sale vs. stock sale changes your tax bill** — Most small trades deals are 'asset sales' — the buyer buys your equipment, trucks, contracts, and goodwill rather than your legal company. Buyers usually prefer this; it can mean more of your proceeds are taxed at higher ordinary-income rates (especially depreciation recapture on equipment) instead of lower capital-gains rates. A 'stock sale' is generally friendlier to you. This is one of the most negotiated points in any deal.
- **Long-term capital gains are taxed lower than income** — Profit on a business you've owned more than a year is generally taxed at long-term capital-gains rates (0%, 15%, or 20% federally in 2025), well below ordinary-income rates that can reach 37%. State taxes apply on top. How the price is split across asset types ('purchase-price allocation') directly affects how much falls into each bucket — negotiate it deliberately.
- **An installment sale can spread the tax out** — If you take part of the price over time (a seller note), you may be able to pay tax as the payments arrive rather than all at once — potentially keeping you in lower brackets. It doesn't apply to everything (inventory and depreciation recapture are taxed up front), but it's a real tool worth asking your CPA about.
- **Plan the tax before you sign — not after** — The single most expensive mistake sellers make is treating taxes as an afterthought. A good M&A-experienced CPA, brought in before you sign a letter of intent, routinely saves multiples of their fee. Deal structure, timing, entity type, and even your state of residence all move the final number you keep.

## The process, step by step

1. **Get curious — no decision required** (Anytime) — You don't need to have decided to start learning. Most owners begin by quietly exploring what their business might be worth. A first conversation carries no obligation, and nothing is set in motion until you say so.
2. **Get your financials in order** (1–3 months) — Pull three years of tax returns and profit-and-loss statements. If the books have been loose, a few months with a good bookkeeper pays for itself. Clean books don't just speed the process — they protect your price.
3. **Understand what it's worth** (Weeks) — Calculate your earnings (SDE or EBITDA), identify your add-backs, and apply a sensible multiple for your trade and size. A direct buyer like Chisel can give you a free, no-obligation indication of value early — before any paperwork.
4. **Find — and vet — the right buyer** (1–3 months) — Buyers differ enormously in intentions, timeline, and how they'll treat your people. Interview them as hard as they interview you. Price matters, but who takes the keys matters just as much.
5. **Receive and negotiate a Letter of Intent** (2–4 weeks) — The LOI is the buyer's written offer — price, structure, timeline, key terms. Don't sign the first draft. Negotiate, ask questions, and have an attorney review it. This document shapes everything that follows.
6. **Due diligence** (30–60 days) — The buyer goes deep — financials, operations, customers, employees, equipment, legal. It's the most intense stretch. Stay organized and responsive; a tidy data room is the best gift you can give your own deal.
7. **Close and transition** (2–4 weeks + handoff) — Final agreements are signed, funds are wired, and the business changes hands. You'll typically spend 30–90 days introducing the buyer to key relationships and making the handoff clean. Then — you're done.

## Raising your value before a sale

- **Build recurring revenue** — Every maintenance agreement you sign in the 12–24 months before a sale compounds: it lifts both your earnings and the multiple applied to them.
- **Work yourself out of the day-to-day** — Hand estimates, dispatch, and customer relationships to your team. A business that runs without you is worth more — and proves it during diligence.
- **Clean up the books** — Separate personal expenses, document every add-back, and get on consistent accounting. Aim for three clean years before you go to market.
- **Lock in your key people** — Tenured, happy techs and a strong ops lead are an asset buyers pay for. Retention plans and clear roles reduce the buyer's biggest fear.
- **Tighten contracts and pricing** — Get customer terms in writing, refresh stale pricing, and resolve any open legal or licensing items. Surprises in diligence cost you money.
- **Fix obvious capital items** — A fleet that's falling apart reads as cost the buyer must absorb. Address the worst of it — or be ready to explain it.

## Mistakes owners make

- **Waiting until you're burned out** — The best time to sell is when the business is strong and you still have energy — not the year you've checked out. Buyers can see exhaustion in the numbers.
- **Chasing the highest headline number** — The biggest price often comes with the most earnout, the most risk, and the least cash at close. Read the structure, not just the top line.
- **Skipping the tax conversation** — Owners routinely leave six figures on the table by not planning structure and timing with an M&A-savvy CPA before signing.
- **Letting one buyer set the pace** — Talking to only one buyer removes your leverage. Even a quiet second conversation changes the dynamic in your favor.
- **Telling the team too early** — Leaks almost always start on the seller's side. Keep the circle tiny until you're ready to tell your people yourself, in your words.
- **Going it alone on the paperwork** — An LOI and purchase agreement are full of terms that quietly shift risk. A few hours with an M&A attorney is the cheapest insurance you'll ever buy.

## Glossary

- **EBITDA** (Earnings Before Interest, Taxes, Depreciation & Amortization) — The most common way buyers measure profitability — roughly the cash your business generates each year before accountants and bankers get involved. Your valuation is built on it.
- **SDE** (Seller's Discretionary Earnings) — EBITDA plus the owner's salary and personal perks. Used for smaller businesses (under ~$1M profit). As you grow, buyers shift from SDE to EBITDA.
- **Multiple** (Valuation Multiple) — The number you multiply earnings by to get value. $500K EBITDA at a 5× multiple = $2.5M. Trades businesses commonly run 3×–10× depending on size, growth, recurring revenue, and risk.
- **Add-backs** (Add-backs / Recasting) — Adjustments that show true profitability — owner salary above market, a personal vehicle, family on payroll, one-time costs. Legitimate, expected, and worth real money. Document them.
- **LOI** (Letter of Intent) — The buyer's written offer after early talks — price, structure, key terms. Mostly non-binding except a few clauses (like exclusivity). It kicks off due diligence.
- **Due diligence** (Due Diligence (DD)) — The buyer's formal homework — financials, contracts, employees, equipment, legal history — before they wire money. The cleaner your records, the faster it goes.
- **QoE** (Quality of Earnings Report) — A third-party check of your financials, usually ordered by the buyer on larger deals, to validate your earnings. It's a focused review, not a full audit.
- **Working capital** (Net Working Capital) — The day-to-day cash the business needs — receivables and inventory minus what you owe suppliers. Deals set a working-capital 'target' so the buyer can operate from day one.
- **Earnout** (Earnout) — Part of the price tied to future performance — e.g. up to $500K over two years if targets are hit. Bridges valuation gaps but adds risk you may not fully control.
- **Seller note** (Seller Financing) — You finance part of the price; the buyer repays you over time (often 3–7 years) with interest. Can raise your total price and shows confidence in the business.
- **Rollover equity** (Rollover Equity) — Keeping a stake in the larger business instead of cashing out fully. If the new owner grows it, your remaining slice can become a valuable 'second bite at the apple.'
- **Non-compete** (Non-Compete Agreement) — Keeps you from starting or joining a competing business for a set time (often 2–5 years) and area. Standard in nearly every deal — make sure the scope feels reasonable.
- **Asset vs. stock sale** (Deal Structure) — An asset sale transfers your equipment, contracts, and goodwill; a stock sale transfers the company entity itself. Asset sales are more common for small deals — and the tax treatment differs, so loop in a CPA.
- **Reps & warranties** (Representations & Warranties) — Promises you make in the contract about the business (the books are accurate, no hidden lawsuits). If they turn out false, you can be on the hook — so make them carefully.
- **Escrow / holdback** (Escrow / Holdback) — A slice of the price held back for a period after close to cover any surprises. Released to you if nothing comes up.
- **Exclusivity** (Exclusivity (No-Shop)) — After signing an LOI you usually agree to stop talking to other buyers for 30–60 days while the buyer does diligence. If the deal dies, exclusivity ends and you can re-engage.
- **CIM** (Confidential Information Memorandum) — The marketing document (usually broker-prepared) describing your business to potential buyers. In a direct sale to a buyer like Chisel, you often skip it entirely.
- **TSA** (Transition Services Agreement) — The written plan for your involvement after close — what you'll help with, for how long, and for what pay. Get it specific so expectations are clear on both sides.

## Per-trade guides

- HVAC: https://chiselindustries.com/selling-a-business/hvac
- Plumbing: https://chiselindustries.com/selling-a-business/plumbing
- Electrical: https://chiselindustries.com/selling-a-business/electrical
- Roofing: https://chiselindustries.com/selling-a-business/roofing
- Pool service: https://chiselindustries.com/selling-a-business/pool-service
- Pest control: https://chiselindustries.com/selling-a-business/pest-control
- Landscaping & lawn: https://chiselindustries.com/selling-a-business/landscaping

Nothing in this document is tax, legal, or financial advice. Figures are 2025–2026 home-services M&A norms presented as ranges.

## Common questions

### How much is my trades business worth?

For most home-services businesses, value lands at roughly 3× to 10× annual earnings. Smaller owner-operator shops are valued on SDE (Seller's Discretionary Earnings) and trade nearer 2×–4×; larger, systematized businesses with recurring revenue are valued on EBITDA and reach 5×–10× or more. Trade matters too — HVAC, plumbing, and pest control tend to command the strongest multiples because of recurring demand. The honest answer is that the only real number comes from someone who understands your specific business; use our estimator above for a starting range, not a promise.

### Do I need a broker to sell my business?

Not necessarily. Brokers typically charge 8–12% of the sale price. If you sell to a direct buyer like Chisel, there's no broker — you keep more of the proceeds. If you want to run a wide auction with many competing buyers, a broker can help. Either way, make sure anyone you engage has specific experience with trades businesses, not just 'small businesses' in general.

### Will my employees find out before we close?

In almost every deal, no. Confidentiality is standard. Buyers sign an NDA before seeing financials, and the transaction stays private until closing. A good buyer wants your team to hear the news from you, in your words, at the right moment — usually right at or after close. Leaks almost always start on the seller's side, so keep the circle small.

### How long does it take from first conversation to close?

Plan for 3–6 months. The LOI stage is usually 2–4 weeks, due diligence 30–60 days, and final legal docs and funding another 2–4 weeks. The biggest variable is how clean your financials are — messy books slow everything down.

### What if I run personal expenses through the business?

Extremely common, and nothing to be embarrassed about. Preparing for a sale includes 'recasting' your financials — identifying and adding back owner-specific costs like a personal vehicle, cell phone, family on payroll, above-market salary, or one-time expenses. A good buyer has seen it all and handles it professionally. Just be honest about what's there.

### How are the proceeds taxed?

Generally, profit on a business owned more than a year is taxed at long-term capital-gains rates (0%, 15%, or 20% federally in 2025), well below ordinary-income rates — but how the deal is structured (asset vs. stock sale, and how the price is allocated) changes the bill meaningfully, and state taxes apply on top. Talk to an M&A-experienced CPA before you sign anything; it routinely saves far more than it costs. Nothing here is tax advice.

### Do I have to stay on after the sale?

Usually for a transition period, but it's negotiable. Most buyers want 30–90 days to ensure a smooth handoff to customers, employees, and vendors. Beyond that it varies — some sellers stay on in an advisory or operating role for a year or more; others walk away on closing day. Be honest about what you want and get it written clearly into the agreement.

### What happens to my customers?

In a well-run sale, customers may not notice anything changed. The phone number stays the same, the brand often stays, and the technicians they know stay. What changes is who owns the business behind the scenes. Good buyers know the customer relationship is the most valuable thing they're buying, and protect it carefully.

### What if I want to keep some ownership?

That's 'rollover equity' — you keep a stake in the larger business instead of cashing out fully. If the new owner grows it, your remaining slice can become a valuable second payday down the road. It's an investment rather than cash, so understand the structure, the people above you, and the likely timeline before you agree.

### What if my business had a bad year recently?

It happens. Buyers usually look at 2–3 years and weight recent performance most heavily, but context matters. If a down year came from a one-time event — a key employee leaving, major equipment failure, a storm — explain and document it. A single soft year rarely kills a deal if the underlying business is sound. A multi-year decline with no clear reason is harder.

### Is it better to sell all of it or part of it?

Depends on what you want. A full sale gives you the cleanest exit and the most cash now. A partial sale (keeping rollover equity, or selling a majority while staying involved) can mean more total money over time and a slower handoff — at the cost of staying tied to the business and its new owners. Neither is 'right'; it comes down to your goals for money, time, and legacy.

### How do I know if a buyer will treat my people well?

Ask directly, and check. Ask what happens to your crew on day one, whether the brand and name stay, and how they've handled past acquisitions. Then ask to speak with an owner who already sold to them. How a buyer talks about your people before the deal is the best predictor of how they'll treat them after.