Recurring Mix Is the Multiple

Two shops can print the same seller’s discretionary earnings and sell a full turn apart. The difference is usually the mix, not the logo on the truck.

If you own a $5 million to $20 million landscaping, HVAC, or cleaning company, this is the lever that actually moves Main Street pricing. I am talking typical owner-operator ranges, not private equity headlines. I am not pricing a real company in this post.

What range are we even in?

On Main Street, owner-operated trades shops still live in a 2 to 4 times SDE conversation. BizBuySell and IBBA-style reporting for HVAC, landscaping, and cleaning has sat in that band for years. Mix, owner dependence, and whether the book bills are what sort you.

That is not a 7 to 12 times EBITDA PE platform number. Those headlines assume professional management and scale. If you still run the trucks and sign the checks, you are in the 2 to 4 times SDE world until the file says otherwise. Argue with your contract mix, not a podcast.

What does 60 to 70 percent maintenance actually do?

Maintenance contracts, tune-up plans, janitorial agreements, and recurring route work sit at the top of that 2 to 4 times SDE band when they are real. Real means billed. Real means a renewal date. Real means a crew can run the stop without a text from you. In a landscaping shop that is weekly or seasonal contracted maintenance. In HVAC that is a membership or commercial service agreement. In cleaning that is a standing building, not a one-time post-construction job.

Sixty to 70 percent of revenue in that bucket is a different company from a shop that lives on design-build, change-outs, or project blitzes. The SDE number can look similar. The multiple does not.

Why. Because the buyer is underwriting next year, not last year. A contract that already sits on next year’s calendar is cash they can model. A beautiful install you might win again is a hope. Banks like the first one. Searchers like the first one. Even a strategic who wants your brand still pays more when the route shows up on Monday without you selling it again.

What compresses you toward 2 to 2.5 times?

Project-heavy work. Design and install as the main event. The owner on every truck. Those three stack.

A landscaping company that is really a design studio with mowers will feel premium in April. A buyer will ask what happens in February. An HVAC company that is really a change-out machine will print a hot summer. A buyer will ask what repeats in October. A cleaning company that is really a bid shop for one-time jobs will look busy. A buyer will ask who calls next month if you take a vacation.

Owner on every truck is the quiet killer. If the estimate, the quality check, and the angry customer all route through you, the multiple compresses even if the mix looks decent. The buyer is not only buying cash flow. They are buying whether that cash flow survives your golf schedule. A shop at 2 to 2.5 times SDE is often a good shop that still needs the owner to be the product.

• Design/install or project revenue over half the book, with no contract behind the job.
• The owner as lead salesperson, lead tech, and Saturday dispatcher.
• Verbal “regulars” that never turned into a signed renewal.
• A crew that can only run if you sequence the day from the cab.

None of that makes you a bad operator. It makes you priced like an owner-operator. That is the honest 2 to 2.5 times conversation. Pretending it is a 4 times file wastes a year.

How does a buyer test whether the mix is real?

Name of the account. Contract or plan type. Price. Start date. Renewal date. Last visit. Who sold it. Whether it billed. Whether it canceled. Then they will sample. They will call a property manager. They will match invoices to deposits. They will ask who owns the renewal call.

A 65 percent maintenance mix that lives in a slide and a 40 percent mix that lives in the billing system will not price the same. The second one wins. I would rather take a smaller honest percentage than a large one that falls apart in week two of diligence.

Have your office manager cut trailing-twelve revenue into contracted recurring versus project. Mark any account that is both a big project customer and a maintenance customer, so concentration is honest.

What can you change this quarter without faking a book?

Pick one offer and attach it to work you already do. HVAC: a two-visit plan on every install and every no-cooling call that you actually complete. Landscaping: a written seasonal or weekly scope on the properties you already visit, with a route day the crew can run. Cleaning: a standing agreement with a frequency, a price, and a start date, not a handshake in the lobby.

Price it so you can staff it. Put it in writing. Let someone other than you offer it. Track yes, no, and not yet every Friday. Three months of billed recurrences beat a year of “our customers are loyal.”

Do not discount the plan to juice the percentage. A cheap plan you cannot staff shows up as missed visits. One offer. One script. One person who owns the yes column.

If you are two years from a sale, this quarter is the right time. If you are six months from a sale, do not fake a launch. Clean the split you already have and be ready to talk about the gap. A buyer can live with a gap they can see. They cannot live with a mix that only exists in a pitch.

What should you stop comparing yourself to?

Stop comparing your shop to a PE platform that bought a $20 million roll-up and printed 8 times EBITDA in a press release. That is not your buyer. That is not your multiple. That is not your mix.

Compare yourself to owner-operators who actually sell. A maintenance book with a foreman and a route sits higher in the 2 to 4 times SDE band than a design-build artist who still draws every bed. An HVAC shop with a membership file sits higher than a change-out hero. A cleaning company with building contracts sits higher than an owner who still loads the van.

The multiple is a sentence about risk. Recurring mix lowers the chance that next year is a new sale. Owner on every truck raises the chance that next year is a vacancy.

I will not put a price on a real company here. Your number waits on your books and your mix. Bring the split. Not a hope.

If a buyer cut your revenue into contracted maintenance versus project tomorrow, which pile would you want them to see first?