From a Tired Owner to a 6.5x Exit: An Anonymized Service-Business Exit Story

This is the story of a regional HVAC owner who spent two years preparing his business for sale and walked away with a 6.5x EBITDA multiple. The names and numbers have been changed, but the process is real.

Call him Marcus. In 2022, Marcus owned a residential HVAC company in a mid-sized Sun Belt metro. The company had been operating for 16 years. Revenue was around $5.8 million, and Marcus had been doing well financially for most of that time. But by the time he turned 54, he was exhausted. He was still on call for emergencies. His best technician had left the previous year. His wife had been asking him about retirement for two years. And he had no idea what his business was actually worth.

The Wake-Up Call

Marcus's first instinct was to call a buddy who had sold a plumbing business three years earlier. That friend had sold for 3.5x EBITDA and thought that was a great deal. Marcus did some back-of-the-napkin math and assumed he was looking at something similar. He figured that was good enough and started thinking about timing.

Then he got a formal valuation. The number shocked him. Not because it was high, but because the analysis showed him exactly why his business was being valued below the market range. His adjusted EBITDA was $620,000, but a full 40 percent of that was held up by owner add-backs that were not cleanly documented. His maintenance agreement base was small relative to his revenue. And the valuation flagged that without Marcus, there was no clear person running the business.

The Decision to Prepare

Marcus made a decision that changed the outcome of his exit: instead of going to market immediately, he spent two years getting the business ready. He hired a general manager from outside the industry, someone with operations experience who could learn the trade mechanics but bring professional management discipline. He gave the GM equity-like incentives tied to EBITDA growth, which aligned their interests.

Over the next 18 months, Marcus and his GM systematically rebuilt the maintenance agreement program. They raised the annual agreement price from $149 to $189 while adding value by including a parts discount and priority scheduling. They ran a reactivation campaign on the customer database and converted 380 lapsed customers back to active agreements. By early 2024, the company had 720 active maintenance agreements generating $136,000 in annual recurring revenue. That was up from 290 agreements and $43,000 two years earlier.

The Financial Cleanup

Marcus also hired a part-time CFO to clean up three years of financials. The work was unglamorous but essential: reconciling the books to tax returns, building a clean add-back schedule with receipts and documentation for every item, and normalizing owner compensation with a documented market-rate replacement analysis. His adjusted EBITDA grew from $620,000 to $870,000 over the two-year period, partly from real business improvement and partly from better documentation of items that were always there but never properly recorded.

What Changed in the Numbers

• Maintenance agreement recurring revenue grew from $43,000 to $136,000 annually
• Adjusted EBITDA moved from $620,000 to $870,000
• Owner add-backs were fully documented, reducing diligence risk
• A GM was in place and had been running daily operations for 14 months
• Revenue grew from $5.8 million to $7.1 million organically

Going to Market

In early 2024, Marcus engaged an M&A advisor who specialized in home services. Together they prepared a Confidential Information Memorandum that told the business story clearly and positioned the maintenance contract growth as a trend line, not a one-year anomaly. The advisor distributed the CIM to 28 targeted buyers: 11 PE-backed platforms, 9 regional strategic acquirers, and 8 individual or search-fund buyers.

Fourteen buyers signed NDAs and received the full package. Nine submitted initial indications of interest. The range was 4.8x to 6.2x EBITDA. Marcus's advisor invited the top four to submit full Letters of Intent after brief management presentations. The final LOI range was 5.4x to 6.5x, with two PE platforms and one strategic acquirer in the mix.

The Deal

Marcus accepted the 6.5x offer from a PE-backed platform that was building a regional footprint in the Sun Belt. The deal was structured as: $4.8 million cash at closing (reflecting 5.5x of the $870,000 EBITDA), an $870,000 rollover equity stake in the platform (representing 10 percent of the platform), and a $200,000 earnout tied to maintaining the maintenance agreement base at 700 or more contracts for 12 months. The nominal enterprise value was approximately $5.87 million, or 6.75x, with the 6.5x figure reflecting a slight discount on the earnout and rollover for risk.

Due diligence took 11 weeks. The buyer's QoE report came back essentially in line with Marcus's seller-side analysis. There was a $55,000 working capital shortfall at closing, which reduced his cash check by that amount. The final cash at closing was $4.745 million.

The Outcome and What Marcus Says Looking Back

Marcus stayed on as a part-time advisor for eight months at $12,000 per month while the GM transitioned into full operational leadership. He was fully out by January 2025. His rollover equity, based on the platform's current trajectory, is projected to be worth between $1.8 and $3.1 million at the next exit in 2028 to 2029. He is cautious about counting that money, but optimistic.

The two years I spent preparing were worth more than anything I did in the five years before them. I almost sold in 2022 for $2.4 million. I am glad I did not.

The Lessons That Transfer to Any Owner

• A formal valuation before you decide to sell tells you where you are and what to fix
• Two years of preparation can change your outcome by several multiples, not just a percentage
• Recurring revenue is the single feature buyers value most in HVAC and home services
• A GM in place for at least 12 months before closing dramatically reduces buyer risk concerns
• Clean, documented financials reduce diligence friction and price chip risk
• A competitive process, not the first call, produces the best price

Marcus's story is not unique in its outcome. It is unique in that he chose to prepare rather than react. If you are where he was in 2022, exhausted, unsure of your number, and starting to think about what comes next, the right first step is to find out what your business is actually worth. Run a free Exit Lab valuation and see where you stand today.