What are the steps to sell my plumbing company?

Most plumbing owners sell once, so nobody hands them the order of things. This guide covers how to sell a plumbing business from three years out to the day you hand over the keys, with the plumbing parts that general guides skip: the master license, service versus new construction, membership plans, drain and sewer work, home warranty work and union status. For the general mechanics of any sale, read how selling a business works alongside this.

This is general information, not legal or tax advice. RetireFromTrades is not a broker. We don't list, market or negotiate sales. If you ask, we can introduce you to an independent licensed broker, and what happens from there is between you and them.

The plan on one screen

Why three years? Advice to contractors planning an exit is to start at least three years ahead, and the slowest plumbing fixes (a new master, a different work mix, a year of clean books) each take a year or more.

Three years out: decide, then start the slow fixes

Write down what you want

Why you are selling, when you want to be out, whether you will stay on, and what you need to walk away with after debt and tax. That last number pays for retirement, not the headline price. The net proceeds calculator gives you a rough first look, no email needed.

Make a license and qualifier plan

This comes first in plumbing. A master plumber license is issued to a person and does not transfer in a sale. If you are the only qualifier, a buyer cannot operate after closing without a plan. Chisel advises starting at least 12 months before you sell, and the honest fixes are slow:

• Get a second master on staff, or help a journeyman get there.
• Plan to stay on as license holder for a year or two after closing.
• Check your state's rule. In Texas a Responsible Master Plumber can be the RMP of record for only one company at a time. In Florida, if the only qualifying agent leaves, the business has 60 days to employ another and may not take on new contracting in the meantime unless the state grants a temporary certificate. California lets a full-time employee qualify the company, which makes a licensed employee a real asset.

Our master license page covers the state rules in detail. One timing catch: if your buyer uses an SBA loan, you can stay only as a consultant for a capped period, 12 months under SOP 50 10 8, rising to 24 months from October 2026. Ask your attorney how that fits your license plan.

Shift service versus new construction

Builder work is bid thin, paid slowly and tied to the housing cycle, so buyers show the most interest in service-heavy companies. Lenders size loans on the service and drain base and discount builder work. Ad Astra's illustrative comps price a 60/40 service and new construction owner-operator at 3.5x versus 6.0x to 7.5x EBITDA for service-heavy peers. If half your revenue comes from builders, two to three years of growing the service side usually pays back more than it costs (our view).

Watch home warranty work

Warranty companies pay fixed rates and can cut your labor rate at renewal, and lenders discount this work too. It keeps trucks busy, but buyers count it for less. If it is more than about a quarter of revenue, move some of that capacity to your own customers.

If you run a union shop

Start earlier. In our view, residential platforms rarely buy union shops, so the likely buyers are mechanical contractors and your own employees, possibly through an ESOP. Our plumbing buyers page covers who buys what.

Two years out: make it run without you

• Books. Get monthly statements reviewed by a CPA, with revenue split by repair, drain and sewer, water heaters, remodel and new construction. SBA lenders now check seller numbers against IRS transcripts, and PE buyers run a quality of earnings review.
• Membership plans. Recurring revenue is what buyers pay a premium for. Chisel says 30% or more recurring revenue can add up to a full turn. Plumbing plans are less common than HVAC plans, so a working one stands out.
• Drain and sewer. Buyers want revenue broken out by category because high-ticket sewer jobs drive margin, per Raincatcher. Own the camera, jetter or trenchless gear and train more than one crew on it.
• Water heaters. Most electric storage water heaters must use heat pumps from May 6, 2029 under the DOE rule, per Salt Creek, and buyers now ask whether your techs can install them. Train them now.
• A second in command. A service manager or office lead who runs dispatch and pricing. Take the owner dependence test to see where you stand.
• Key people. Put retention bonuses or incentive plans in writing for your masters and service manager. One industry podcast claims incentive plans set up 12 to 24 months before a sale lift value by 15% to 20%; treat that as one advisor's claim, not a rule.
• Plumbers on 1099. If plumbers work like employees but are paid on 1099s, talk to your CPA about moving them to W-2. Buyers find this in diligence and take it off the price.

Twelve months out: know your range and your buyers

Get a starting range on the right earnings measure. Small owner-run shops are priced on seller's discretionary earnings (SDE). BizBuySell's plumbing sales from 2021 to 2025 sold for a median 2.24x SDE, and larger companies with managers are priced on adjusted EBITDA. List every add-back with proof using the plumbing add-backs checklist. Then try the free plumbing estimate, which takes about 5 minutes.

Know who is likely to buy. Individual buyers with SBA loans and local competitors buy most small shops; PE add-on buyers mostly start at about $1M of EBITDA. The plumbing buyers page compares every type, including where buyers are busiest right now.

Decide on help. A broker or M&A advisor runs the process, and fees are real money: one trades broker publishes $100,000 on a $1M sale and $300,000 on a $5M sale. In 17 states a business broker must hold a real estate license, and Illinois requires registration with its securities regulator instead. Ask any broker what license they hold.

Six months out to closing

1. Go to market quietly. Buyers sign a nondisclosure agreement before they see your name or numbers. Site visits happen after hours.
2. Compare offers on cash at closing. Offers mix cash, seller notes, earnouts and sometimes rollover equity. Where an earnout paid anything, the median payout was 43 cents on the dollar. Read cash at closing.
3. Sign a letter of intent. The LOI sets price, structure, your role after closing and an exclusivity period. Get your CPA and attorney in before you sign, including on asset versus stock sale.
4. Due diligence. Expect requests for licenses, insurance, permits, payroll, customer lists and job costing. Answer fast and honestly. See due diligence.
5. Close. The purchase agreement, debt payoffs, the license change at the state board, and transfer of vehicles, leases and accounts.
6. Hand over. Introduce the buyer to your big accounts and your plumbers. Keep your license plan promises. Read after the sale.

How long does it take? We could not find a published average time to sell a plumbing company. Some platforms move fast (Leap Partners describes a 45-day process), but the prep that sets your price takes years.

Common mistakes

• Leaving the license plan to the end. If you are the only master, a buyer has nothing to buy the day you leave.
• Selling the year after a big builder contract. Buyers price builder revenue lower and ask whether it will repeat.
• Counting past customers as members. Buyers count paying, renewing members, not a list of everyone you have served.
• Rough add-backs. Undocumented add-backs are the ones buyers cut first.
• Judging offers by headline price. Compare cash at closing, note terms and earnout targets side by side.
• Telling staff too early, or too late. Tell your key masters and managers when a buyer needs them, with a retention offer in hand.
• Letting the business slide during the sale. Declining call volume moves the multiple down, per Raincatcher.

Questions to ask your CPA, attorney or broker

• Under my state's rules, what happens to my company's license the day I leave, and how long do we have to replace the qualifier?
• If the buyer uses an SBA loan, how long can I stay on, and does that fit my license plan?
• Asset sale or stock sale: what is the after-tax difference for me?
• How will you treat my seller note and earnout for tax, and what happens if the buyer misses payments?
• Which of my add-backs will a buyer accept, and what proof do I need for each?
• Are any of my 1099 plumbers a risk in diligence?
• What license do you hold, how are you paid, and what do you charge if it doesn't sell?
• Which buyer types have you sold plumbing companies to, and in which states?

Sources

1. Contracting Business, The 12 Essential Steps for a Profitable Contracting Exit Strategy, Part I
2. Chisel Industries, How to sell a plumbing business
3. Texas State Board of Plumbing Examiners, Responsible Master Plumber
4. Florida Statutes 489.119, Business organizations; qualifying agents
5. California CSLB, Application to Replace the Qualifying Individual
6. Prencipe International, SBA caps how long your seller can stay
7. Raincatcher, Private Equity in Plumbing
8. Midas Partners, Financing a plumbing company acquisition
9. Ad Astra Equity, Plumbing Business Valuation and EBITDA Multiples
10. Plumbing and Mechanical, Working with home warranty companies
11. CapBench, SBA SOP 50 10 8 rule changes 2025 to 2026
12. Salt Creek Advisory, Who Buys Plumbing Companies in 2026
13. PM Magazine, Retention: The Best Exit Strategy
14. BizBuySell, Plumbing Business Valuation Multiples and Financial Benchmarks
15. Brentwood Growth, Our Pricing
16. BizBuySell, Business Broker Licenses, Registrations, and Certifications
17. Leap Partners, Our Process