Perspective on Plumbing & HVAC multiples?

March 03, 2024

by a searcher from Duke University - The Fuqua School of Business in Portland, ME, USA

Greetings All,

Currently doing diligence on Plumbing & HVAC company doing $4M revenue, $800K SDE, with 60% of revenue from new construction.

Interested to get perspectives on current multiples being paid in the plumbing and HVAC space, and if multiples are getting a haircut due to current interest rates.

Wondering if a company that might have sold for 4.5 a couple years ago is getting pushed down a few points due to interest rate environment.

Thanks for your perspectives. --John

Reply by a professional
from Western Washington University in Spokane, WA, USA

Curious on this as well. BVR would seem to suggest that the range for SDE multiples is###-###-#### with a median of###-###-#### Range on EBITDA is###-###-#### with a median of 4.0. At 800K of SDE, 4.5 seems high. Lots of other factors - in particular, what is the company's before tax unadjusted net income?

I'll be watching this thread as I am also working on a deal for an HVAC business.

Reply by a searcher
from University of Southern California in Toronto, ON, Canada

In addition to the challenge of managing construction oriented mechanical businesses you are likely to end up in a fight with the seller about working capital which can dramatically change the economics. I’d be very tempted to say don’t buy anything with more than maybe 20% construction exposure but to each their own.

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