Last updated: 2026-04-13
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Start 12-18 months before sale by auditing your last three years of tax returns and creating clean, documented financial statements that separate owner discretionary expenses from operational costs. Buyers need to see consistent EBITDA (earnings before interest, taxes, depreciation, amortization)—typically calculated by adding back owner salary, vehicle expenses, insurance, and one-time costs. In home services M&A, most deals value companies at 4-7x EBITDA, so a $500K EBITDA business might sell for $2-3.5M. Document everything: customer contracts, recurring revenue percentages, job costing systems, and payroll records. Reconcile your books to tax returns and fix any accounting inconsistencies now.
Buyers will request three full years of financial statements and tax returns. If you’ve been running off QuickBooks with minimal documentation, invest in a bookkeeper or accountant to create clean P&Ls and balance sheets for the past 36 months. Flag any unusual items—equipment sales, one-time contracts, or personal expenses—so you can explain them in the data room.
Calculate your normalized EBITDA. This is critical. Most home services companies add back:
A plumbing company with $800K in revenue and $120K owner draw might show $140K net profit on tax returns, but actual EBITDA could be $220K after adjustments. That difference matters—it’s potentially $400K-$600K in additional enterprise value.
Buyers want to know where money comes from. Break down your revenue by source: residential service calls, commercial contracts, maintenance plans, emergency work. Recurring revenue (service plans, maintenance contracts) commands 1.5-2x higher multiples than one-time jobs.
Identify your top 10 customers. If any single customer represents more than 10-15% of revenue, that’s a concentration risk that will reduce valuation. Have documentation: signed contracts, payment history, retention likelihood. If your top customer might leave post-acquisition, be transparent now rather than in due diligence.
Create a folder structure with: tax returns (3 years), bank statements (3 years), financial statements, customer contracts, employee agreements, vendor agreements, equipment leases, insurance policies, and any litigation or compliance issues. Make it searchable and clearly labeled. This speeds due diligence and demonstrates you run a professional operation.
Clean financials directly increase your sale price. A $2M revenue home services company with messy books might sell for $600K EBITDA multiple (4x = $2.4M). The same company with clear, documented financials and transparent owner adjustments might achieve $280K EBITDA × 6.5x = $1.82M. The work pays off. When you’re ready to explore buyers—whether PE firms, strategic acquirers, or family offices—platforms like CTA Acquisitions connect you with 40+ vetted capital partners. Start the financial cleanup now; it’s non-negotiable for maximizing value.
Add back personal expenses the buyer won’t incur: your salary (replace with $80-120K manager rate), vehicle payments if you’re driving a luxury car, country club dues, family members on payroll not doing real work, excess insurance, and professional fees for one-time projects. Don’t add back legitimate operating costs like rent, utilities, or standard employee salaries. The rule: would a new owner need to pay this expense to run the business? If no, add it back.
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About the Author
Christoph Totter is the founder of CT Acquisitions, a buy-side partner headquartered in Sheridan, Wyoming. We work directly with 76+ buyers — search funders, family offices, lower middle-market PE, and strategic consolidators — including direct mandates with the largest home services consolidators that other intermediaries can’t access. The buyers pay us when a deal closes, not the seller. No retainer, no exclusivity, no contract until close. Connect on LinkedIn · Get in touch