Valuing a Trades Business — What's Your Experience?
I've been having some conversations lately about what a small trades company is actually worth — and I'm getting different answers depending on who I talk to.
Some people say 1x annual gross revenue is the standard for a well-run trades business. Others say it's more like 2–4x EBITDA (net operating profit). And for a breakeven company with good employees and solid clients but no retained earnings, both methods produce very different numbers.
A few questions for the group:
- Has anyone here bought or sold a trades business — or seriously explored it? What valuation method did you actually end up using?
- How much does systemization affect the number in your opinion? Does a business running on Jobber with SOPs, long-term employees, and documented processes command a premium over an owner-operated shop where everything lives in the owner's head?
- If you were bringing a friend or colleague into your business as a part-owner — someone who brings clients, crew, and vehicles — how would you structure that deal fairly for both sides?
Would love to hear from anyone who's been through this — buyers, sellers, or people who've taken on a partner. This stuff doesn't get talked about enough in the trades.