For business owners contemplating a sale—whether now or in the future—the most pressing and often misunderstood question is: What is my business actually worth?
While there are various methods for estimating a company's value, including discounted cash flow analyses, asset-based approaches, and industry-specific benchmarks, the most accurate measure is often the simplest: what the market is willing to pay. Buyers ultimately determine value, and their willingness is shaped by financial performance, growth potential, risk profile, and—critically—comparable transactions in the industry.
This market-based perspective is particularly useful when looking at industries where valuation multiples have stabilized within relatively predictable ranges. Below, we examine three such sectors—HVAC and home services, veterinary practices, and retail/restaurant businesses—where we’ve consistently seen particular valuation multiples applied. These insights can help business owners benchmark expectations and prepare more strategically for a potential exit.
HVAC & Home Services: 4–5x EBITDA
Businesses operating in the heating, ventilation, air conditioning, and related home services space generally trade at a multiple of 4 to 5 times EBITDA. These businesses tend to be in steady demand due to the essential nature of their services, seasonality-driven cycles, and the increasingly important role of preventative maintenance agreements and service contracts in creating recurring revenue.
Factors driving these multiples include:
Recurring Revenue Models: Annual service contracts provide predictability and reduce revenue volatility.
Skilled Labor Scarcity: HVAC firms with a trained, reliable workforce are valued higher due to labor market constraints.
Owner Independence: Companies with systems and teams in place that are not overly dependent on the owner’s day-to-day involvement attract premium valuations.
Regulatory Tailwinds: Environmental and energy-efficiency regulations are creating opportunities for retrofit and upgrade work.
HVAC businesses that demonstrate consistent growth, well-documented systems, and a diversified customer base are most likely to land at the higher end of the range—or potentially above it in competitive sale processes.
Veterinary Practices: 8–10x EBITDA
Veterinary practices continue to be one of the most attractive segments in the healthcare and professional services industries, often trading in the 8 to 10 times EBITDA range. Demand is driven largely by institutional investors and veterinary consolidators, who are engaged in aggressive roll-up strategies across the U.S. and abroad.
Reasons for higher multiples in this sector:
Recession Resilience: Pet ownership tends to remain steady—even grow—during economic downturns, leading to consistent demand for care.
Customer Loyalty: Long-term client relationships and high retention rates are common, especially for general and preventative care services.
Scalability: Corporate buyers see opportunities to increase efficiency, cross-sell services, and centralize back-office functions.
Limited Supply Of Practices: There are a finite number of well-run, profitable practices available on the market at any given time.
Practices that are multi-vet, have associate DVMs under contract, and show healthy year-over-year growth are especially attractive to buyers. Those with real estate included in the transaction or with options to expand capacity often fetch even higher valuations.
Retail & Restaurants: 2–3x EBITDA
Retail stores and restaurants typically sell for lower multiples, generally 2 to 3 times EBITDA. While these businesses can be highly profitable and provide steady cash flow, they are often viewed by buyers as riskier investments due to various operational and market factors.
Key valuation considerations include:
Economic Sensitivity: Retail and dining tend to be highly affected by changes in consumer confidence and discretionary spending.
High Fixed Costs: Leases, labor, and inventory requirements limit flexibility, especially in slower months.
Competition And Trends: Rapidly changing consumer preferences and intense local competition can impact long-term viability.
Owner-Dependence: Many small restaurants and shops are heavily reliant on the founder or owner for operations, branding, or community engagement.
Nonetheless, there are always exceptions. Brands with a strong identity, high customer loyalty, multiple revenue streams (e.g., retail + e-commerce or dine-in + catering), and well-trained teams can command premiums, particularly if they're positioned for franchising or multi-location expansion.
The Reality Of Valuation: It’s What The Market Says
Ultimately, regardless of your internal financial models or projections, your business is worth what someone is willing to pay for it. That may sound reductive, but it is a core truth in the world of mergers and acquisitions. Valuation is dynamic—shaped by industry trends, buyer appetite, interest rates, capital availability, and strategic fit.
While the valuation multiples discussed here offer useful benchmarks, they are not guarantees. Every business is unique, and its value will reflect a mix of qualitative and quantitative factors. Clean financials, strong leadership, recurring revenue, customer diversity, and operational systems all contribute to whether you’re at the low, average, or high end of your industry’s range.
Conclusion
Understanding what the market pays in your sector is the first step in setting realistic expectations. The next step is to build toward a business that justifies a premium valuation.
If you’re considering a sale—whether in the next 12 months or five years—now is the time to begin preparing.
Key steps include:
Professionalizing Your Financial Reporting: Buyers want clean, well-organized books.
Reducing Owner Dependency: Build systems, delegate operations, and establish leadership beyond the founder.
Enhancing Recurring Revenue Streams: Predictability increases confidence—and price.
Documenting Key Processes And Contracts: Ensure transparency and ease of transition for the next owner.
At Exit Stage Left Advisors, we help business owners navigate this process—from early-stage planning to final negotiation—by focusing on both the emotional and financial components of exit strategy. The more prepared you are, the more likely you are to achieve not just a sale, but a successful and satisfying one.
