Business Valuation Calculator for Contractors
Find out what your business is worth to PE firms. Enter your P&L numbers, owner compensation, and add-backs to see your adjusted EBITDA, valuation at multiple ranges, and the gap between owner-dependent and PE-ready pricing.
📋 Your P&L Numbers
Your annual profit and loss numbers. Use your most recent full year.
💰 Owner Compensation & Perks
What you take from the business. PE firms normalize this to market rates.
🔧 One-Time & Non-Recurring
Expenses that will not repeat under new ownership.
📊 EBITDA Components
Standard accounting add-backs. Pull these from your tax return.
📈 Valuation Multiple Range
Your Business Valuation
$0
estimated business value
Comparison Valuations
The PE Gap
$0
Enter your numbers to see your business valuation and PE readiness assessment.
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How to Value Your Trade Business
Most contractors have no idea what their business is worth. They hear that businesses sell for "3 to 5 times earnings" and assume that is the full story. It is not. The number PE firms actually use is adjusted EBITDA, and the multiple they apply depends on how the business is structured, not just how much money it makes.
This calculator walks you through the adjusted EBITDA calculation step by step. Enter your P&L numbers, your owner compensation, personal expenses run through the business, one-time costs, and standard accounting add-backs. The result is the number a buyer would use as the starting point for a valuation offer.
The real insight is the PE gap: the difference between what your business is worth as an owner-dependent operation (3.5x multiple) vs what it could be worth as a PE-ready business with management, systems, and documented processes (7x multiple). For most contractors, that gap is $500,000 to $2,000,000 or more. Closing it is the single highest-ROI project you can work on.
Understanding Add-Backs
PE firms do not use your reported net income to value your business. They reconstruct it. Owner salary above what a general manager would cost gets added back. Personal expenses run through the business get added back. One-time legal fees, equipment purchases, and renovation costs get added back. Interest, taxes, depreciation, and amortization get added back. The result is adjusted EBITDA: the true operating cash flow of the business.
What Drives the Multiple
Two businesses with the same EBITDA can have wildly different valuations. The multiple depends on: owner dependency (can it run without you?), revenue concentration (does one customer represent 20%+ of revenue?), growth trajectory, recurring revenue percentage, management team depth, and documented SOPs. PE firms pay premiums for businesses that are systems, not people.
Key Benchmarks
- Owner-dependent businesses: 3x to 4x adjusted EBITDA
- Managed businesses with GM: 5x to 7x
- Regional platforms ($3M+ EBITDA): 8x to 12x
- National platforms ($10M+ EBITDA): 10x to 15x+
- Wrench Group (HVAC): sold at 12x to 14x EBITDA
- 76% of home service businesses are still independent, no management team
Frequently Asked Questions
How is a home service business valued?
Most small trade businesses sell at 3x to 5x adjusted EBITDA. PE-ready businesses with management teams and systems command 6x to 8x. Platform companies with $3M+ EBITDA can reach 10x to 15x. Revenue is not the primary driver. Buyers pay for profitability, specifically adjusted EBITDA, which adds back owner compensation, one-time expenses, and non-cash charges to your net income.
What is adjusted EBITDA?
Adjusted EBITDA starts with your net income and adds back interest, taxes, depreciation, amortization, excess owner compensation, and non-recurring expenses. It represents the true cash flow a buyer would receive. For a contractor earning $180K net income with a $150K salary (vs $85K market rate), $40K in perks, and $87K in ITDA, the adjusted EBITDA is $372K, more than double the reported net income.
What are EBITDA add-backs for contractors?
Common add-backs include: excess owner salary above market rate for a general manager, personal vehicle and phone expenses run through the business, family members on payroll who are not essential, one-time legal fees or equipment purchases, and personal travel charged to the business. These are legitimate expenses you take as an owner that a new buyer would not need to pay.
What EBITDA multiple does my trade business get?
Owner-dependent businesses with the owner doing sales, estimates, and management typically sell at 3x to 4x. Businesses with a general manager and documented processes sell at 5x to 7x. Regional platforms with multiple locations and professional management sell at 8x to 12x. The multiple depends on size, growth rate, customer concentration, and how dependent the business is on the owner.
What is the PE gap?
The PE gap is the difference in valuation between an owner-dependent business (3.5x multiple) and a PE-ready business (7x multiple) with the same EBITDA. For a business with $500K adjusted EBITDA, the gap is $1.75M vs $3.5M, a difference of $1.75M. That gap represents the value of building systems, hiring management, and making yourself replaceable.
How do I increase my business valuation?
Focus on three things: increase adjusted EBITDA through better pricing and efficiency, reduce owner dependency by hiring and training a general manager, and build recurring revenue through maintenance contracts. A business that can run without the owner for 90 days is worth significantly more than one that stops when the owner goes on vacation.
Knowing Your Numbers Is Step One
This calculator shows you one piece. The Growth Report shows you the full picture: where you're leaking revenue, what to fix first, and how contractors like you are growing past the ceiling.