What is my plumbing company worth?

A plumbing business valuation is earnings times a multiple, then adjusted for the things buyers check. Here is how our calculator does each step.

1. Earnings. We start with your net profit before tax and add back your own pay, loan interest and depreciation, and personal or one-time costs run through the company. That gives seller's discretionary earnings (SDE): what one full-time owner takes home. Add-backs you itemize count more than a rough lump sum, because buyers cut the ones you can't prove. SBA lenders now check seller numbers against IRS transcripts, so what ties to your returns is what counts. If you want to find yours first, try the add-back finder.

2. The basis. Small, owner-run shops are priced on SDE. Companies earning about $1M or more once a manager is paid are priced on adjusted EBITDA, because PE add-on buyers generally need about $1M or more of EBITDA. In between, we blend the two so a small change in profit doesn't swing the answer by hundreds of thousands of dollars.

3. The base multiple. For small plumbing companies our starting point is BizBuySell's sold data: a median 2.24x SDE, middle half 1.66x to 3.15x. For larger companies we use survey ranges of about 4.0x EBITDA for $2M to $5M deals and 5.8x for $5M to $50M deals (IBBA and M&A Source figures reported by Salt Creek Advisory), checked against the two Kingsway plumbing deals at about 6.25x. These are illustrative ranges, not a price.

4. Plumbing adjustments. Then we move the multiple up or down for what plumbing buyers check first:

• Who holds the master license and what the plan is to replace you. A master license is issued to a person and does not transfer in a sale; if you are the only qualifier, the buyer cannot operate after closing.
• Your mix of service, drain, water heater and new construction work. Ad Astra's illustrative comps price a 60/40 service and new construction owner-operator at 3.5x against 6.0x to 7.5x for service-heavy peers.
• Membership plans, commercial contracts, technician bench, who answers the phone, your largest customer, your books, your fleet and your state.

The size of each adjustment is our estimate, based on published buyer criteria and deals where they exist. The full list is on what makes a plumbing company worth more.

5. A range, not a number. You get a low, likely and high value, plus a confidence level that drops when answers are rough or books are do-it-yourself. We never ask for your SSN, EIN, tax returns or bank logins. The method, versions and every source are on our methodology page.

Plumbing companies are priced in two very different ways, and most owners don't know which side of the line they're on.

SDE (Main Street). If you run the company and most of the profit is really your pay, buyers price it on seller's discretionary earnings. That buyer is usually an individual with an SBA loan or a local competitor who will step into your seat. Chisel Industries calls plumbing "very bankable" for these buyers, but SBA 7(a) loans cap at $5M, which limits what an individual can pay.

Adjusted EBITDA (institutional). If a manager could run the company without you, buyers subtract a market salary for that manager from your earnings and price what is left. We use a base of about $100,000 to $150,000 by company size plus about 20% for taxes and benefits (our estimate). For reference, the national median wage for general and operations managers was $101,280 in May 2023. The multiple on this number is higher, which is why the same company can be worth very different amounts to different buyers.

Where the line sits. Our calculator values on SDE below about $500,000 of adjusted EBITDA, on adjusted EBITDA at $1M or more, and blends in between. If the business can't run without you at all, it stays at least half on the SDE side however large the profit, because no institutional buyer prices it without an earnout. Your result tells you which basis was used and why.