What Is an HVAC Business Worth in 2026? #
An HVAC business is valued on what it earns, multiplied by a number that reflects how much of that earning survives the owner's departure. Everything else in a valuation argument is a dispute about one of those two terms.
For owner-operated companies the earnings measure is seller's discretionary earnings, and First Page Sage's Q1 2025 compilation puts the multiple at 4.8x to 5.7x where discretionary earnings sit in the smallest band it reports, rising through 5.4x to 6.5x and reaching 6.4x to 7.9x at the top of its range. It puts the current market average at 5.1x discretionary earnings, or about 8x EBITDA.
Those multiples are a published compilation rather than a statistic. First Page Sage states that it assembles them from private equity networks, expert interviews and proprietary databases, and discloses no sample size, so treat them as the range the market is transacting in rather than as a measured average.
What the Business Actually Earns #
The federal record gives the revenue side precisely. The average US plumbing and HVAC contractor booked $2.72M of annual revenue, spreading the receipts the 2022 Economic Census recorded for the industry across the 109,601 establishments County Business Patterns counted in that same year. It is the figure our HVAC report carries, so the two agree.
For the earnings side, IRS Statistics of Income reports a net profit margin of 5.7% for corporations in this industry, measured as net income divided by total receipts for tax year 2022, which is the most recent year published.
Used correctly, the two figures bracket the problem. The revenue figure tells you what an average contractor of this type turns over; the margin tells you how thin the industry's retained profit is once everyone including the owner has been paid. The gap between that margin and a seller's discretionary earnings figure is, almost entirely, the owner's own compensation.
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Why SDE and EBITDA Give Different Answers #
The two earnings measures describe two different buyers, and quoting a multiple without saying which one is in use is the most common error in this market.
Seller's discretionary earnings is profit before the owner's salary, before interest and tax, and before one-off or personal expenses run through the business. It is the right measure when the buyer intends to run the company themselves, because it describes the total financial benefit the business will deliver to one working owner.
EBITDA leaves a market-rate manager's salary as a cost. It is the right measure when the buyer is a private equity platform or a larger contractor that will install management, because that salary is a real expense they will carry.
The same business therefore has two correct valuations that differ by more than the multiple alone, since the earnings base differs too. A seller comparing an offer built on EBITDA against a benchmark quoted on discretionary earnings will conclude they are being underpaid when they may not be.
What Counts as an HVAC Business #
Plumbing, Heating, and Air-Conditioning Contractors (NAICS 238220) is a single federal industry, and that is the most important thing to know before using any figure on this page.
Census defines it as establishments primarily engaged in installing and servicing plumbing, heating and air-conditioning equipment, and it does not separate the three. IRS Statistics of Income uses the same combined grouping. So the revenue figure and the margin above describe plumbing and HVAC together, and no federal source isolates HVAC on its own.
For a valuation this matters in one direction in particular. Plumbing and HVAC carry different service mixes, different equipment costs and different seasonality, and the commercial multiples in circulation are generally quoted for HVAC specifically. Pairing an HVAC multiple with a combined plumbing and HVAC earnings figure imports a mismatch, and the honest response is to build earnings from the business's own accounts and use the federal figures as context for scale.
Related work sits outside the industry. General building construction, electrical contracting and appliance repair are classified separately, so a company doing a mix of trades may not be a 238220 establishment at all.
Grounding the Valuation in Federal Contractor Economics #
A valuation defended in a lender's file or across a negotiating table needs two things the multiples alone do not provide: evidence that the earnings are real, and evidence about the industry the business sits in.
Start with the business's own accounts, normalised: owner compensation identified, personal expenses removed, one-off items stripped out, and maintenance revenue separated from project revenue. Then place it against the industry. The average contractor's revenue above tells you whether the business is small, typical or large for its classification, which is what decides which multiple band applies.
Our margins page covers the cost structure behind that in more detail, at HVAC and plumbing profit margins, and the demand picture is in HVAC industry trends.
| Input | On this page | In the report |
|---|---|---|
| Valuation multiples, from a named industry compilation | Yes | Discussed, not measured |
| Revenue per contractor | Yes | Yes |
| Corporate net margin, from IRS Statistics of Income | Yes | No |
| Contractors and employment by state | No | Yes |
| Wage benchmarks and industry receipts | No | Yes |
| Market concentration and five-year forecast | No | Yes |
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