1. B C D E F
3 3
4 4
5 5
6 Advertising Rent / Mortgage 6
7 Vehicle Expenses Other Leases 7
8 Professional Fees Repairs 8
9 Employee Benefit Programs Maintenance 9
10 Insurance (other than health) Supplies 10
11 Legal and professional Travel, Meals, etc. 11
12 Office Expense Utilities 12
13 Wages / Payroll Equipment / Parts 13
14 Misc… Misc… 14
15 Misc… Misc… 15
16 Misc… Misc… 16
17 Misc… Misc… 17
18 Total Expenses = (C6:C17) + (F6:F17)→→→→→→ 18
19 19
20 Net Income or (Net Loss) /EBITDA 20
21 21
21 21
23 23
24 Percentage of Gross Sales Method* 24
25 Enter % of Gross Sales 25
26 Business Value = E3 X C25→→→→→→→→→→→ 26
27 Sales or Cash Flow Method Mutiplier ** 27
28 Cash Flow =F21→→→→→→→→→→→→→→→ Fair Market Value: Inventory/Equipment/Vehicles 28
29 Enter Sales Multiplier Fair Market Value: Real Estate/Vehicles 29
30 Business Value =C28 X C29→→→→→→→→→→→ *** Enter % of Gross Sales 30
31 Business Value = (F28 + F29) + (E3 X F30)→→→→ 31
*** Could be Cash flow, so F31 would be (F28+F29+C28)
In the HVAC industry the biggest problem, when trying to determine a company’s value, is the lack of
barriers to the market from competitors. Even in states with licensing regulations, practically anyone
with a truck can be a hvac contractor, there simply is not enough roadblocks to limit competition in any
one geographic area. This is why longevity and an agreement customer base is so important.
Whether your Exit Strategy is to sell or will, your company to a stranger, employee or family, it is
important to always, know its value. But until that time comes it is even more important to grow that
business.
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HVAC Business Valuation
Company Valuation
* Percentage of Gross Sales is typically 25 - 33 percent in the HVAC Industry.
**Sales Multiplier is typically 2 to 5 for most types of businesses. It is the number of years an investor could expect to make
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their investment back. B28 can be cash flow or monthly sales (Monthly Sales would be E3/12)
Fair MarketValue is the appraised value of physical assets to be sold
with the busines and include items but not limited to Real Estate,
Inventory, Ofiice Equipment, Shop Equipment Etc…
Company Revenue / Gross Sales for the year
All income the business received before any cost of sales or expenses have been deducted
Company Expenses for the Year
Earnings before Interest, Taxes, Depreciation and Ammorotization =F18 - E3→→→
Cash Flow Is not necessary for an initial valuation, but
can and will be determined during Due Diligence of a
sale
Net Profit (before tax) + Any Payment made to the Owner + Interest + Any Depreciation
of Assets = Cash Flow→→→→→→→→→→→→→→→→→→→→→