Private Equity Is Buying Up Your Trade. Know Your Number First.
Investors are rolling up home service contractors at record pace. The owners who know what their business is worth, and can prove it, are the ones who name the price.
Eddie CalderinFounder, RevForge IQJune 1, 20266 min read
Private equity has discovered the trades. Roofing, HVAC, plumbing, electrical: the same playbook that consolidated dentistry and veterinary clinics is now pointed at the businesses you and your neighbors built with your hands.
The pitch sounds friendly. A buyer shows up with a clean suit and a confident number. For a lot of owners, that number is the first time anyone has ever told them what their life's work is worth. And that is exactly the problem.
Why the rollups move so fast
A consolidator is not buying one business. They are assembling a regional platform, and every shop they add makes the whole thing worth more. They can pay a fair price for you and still win, because your revenue, your crews, and your customer base plug straight into a machine that trades at a higher multiple than you ever could alone.
That math is not a secret. The buyer knows it cold. The seller, most of the time, does not.
The number is not one number
When a buyer values your business, they are not just looking at revenue. They are weighing:
- Recurring revenue. Maintenance plans and memberships that bill every month are worth far more than one-off jobs.
- Customer concentration. If one account is a fifth of your revenue, that is a discount, not a strength.
- Clean books. Numbers a buyer can trust without a forensic dig raise the price and shorten the deal.
- Whether it runs without you. A business that depends on the owner is buying that owner a job. A business that runs on systems is buying the new owner a return.
Every one of those levers moves your multiple. And every one of them is something you can improve in the months before an offer ever lands.
Knowing your number is leverage, not vanity
The goal is not to obsess over a valuation you may never cash in. The goal is leverage. When you know your number, and you can prove it with real data instead of a shoebox of invoices, three things change:
- You stop reacting to the buyer's number and start setting your own.
- You see which levers to pull this quarter to be worth more next year.
- You keep the option open. You sell when it is right for you, not when you are cornered.
Start before the offer comes
The worst time to learn what your business is worth is the day someone offers to buy it. By then the levers are set and the leverage is theirs.
The best time is now, while you still have quarters to clean up the books, build the recurring base, cut the concentration, and put systems where your memory used to be. That is the work that makes you worth more, and makes sure you are the one who names the price.
Nobody lowballs a contractor who knows his numbers.
Fifteen years across Angie's List, HomeAdvisor, Yelp, Hearth, and his own agency, all spent on contractors. He built RevForge IQ to put their numbers back in their hands.