Trades businesses sell well. They have real cash flow, work that cannot be sent offshore, and buyers who understand them. But a buyer is pricing four specific things, and only one of them is on the profit and loss: the licence, the recurring work, the technicians, and what you owe on jobs already done.
In short
- The licence is attached to a person, not the company, and the deal has to solve for that before anything else.
- Recurring maintenance agreements are worth a multiple. One-off call-out volume is worth much less.
- Technicians can resign the week after closing, and every buyer knows it.
The licence question comes first
In most states the right to do the work sits with a qualified individual who is designated for the company, not with the company itself. In Texas, air conditioning and electrical contractors are licensed through the Texas Department of Licensing and Regulation, and plumbers through the Texas State Board of Plumbing Examiners. If that designated person is you, the business cannot legally operate the day after you leave unless something has been arranged.
There are three usual answers, and they should be decided early because they change the shape of the whole transaction: the buyer already holds the licence, the buyer employs someone who does, or you stay on as the designated licence holder for a defined period. The third is common and is not free — it is a real obligation with real liability, and it belongs in the agreement rather than in a handshake.
- Confirm which licences the business relies on and whose name each one is in
- Ask any prospective buyer about licensing in the first conversation, not the fifth
- If you are staying on to cover the licence, agree the length, the pay and the liability in writing
Recurring work is the part that carries a multiple
A hundred maintenance agreements that renew are a different asset from a hundred customers who called once when something broke. The first is predictable revenue a buyer can underwrite and a lender can lend against. The second is a reputation, which is real but does not transfer as cleanly as owners expect.
If you have agreements, count them, show the renewal rate and show what a customer on an agreement is worth against one who is not. If you do not have them, building that book is the highest-return preparation work available to a trades business, and it takes a season or two rather than a week.
| Replacement-led | Agreement-led | |
|---|---|---|
| Annual revenue | $1,800,000 | $1,800,000 |
| Maintenance agreements | 40 | 610 |
| Revenue visible at year start | Low | Substantial |
| Depends on advertising spend | Heavily | Partly |
| How a buyer reads it | Volume it must re-win each year | A base it can grow from |
The technicians are the risk the buyer is really weighing
In a skilled-trades market, the constraint is not customers, it is people who can do the work. A buyer is asking whether your crew stays. If the lead technician has been there eleven years because of a relationship with you personally, that is a risk they will price.
Pay bands, written terms, tenure, certifications and who trains new hires are worth documenting before you go to market. So is the answer to the awkward question: which two people, if they left, would take real revenue with them?
- Written employment terms and current pay for every technician
- Certifications and licences by person, with renewal dates
- An honest note on who is genuinely hard to replace
Trucks, stock and the work already done
Owners often expect the fleet to be added to the price. Usually it is not: the vehicles are the equipment the business needs to produce the earnings the price is already based on. A tidy, maintained fleet supports the multiple. A fleet with three trucks near the end of their life quietly lowers it, because the buyer is looking at capital they must spend in year one.
Warranty and callback obligations on completed work are a genuine liability and should be surfaced early. A buyer who discovers a pattern of returns in diligence does not just discount the price; they start wondering what else has not been mentioned.
Common questions
- Can my licence transfer to the buyer with the business?
- Generally no. The qualification belongs to an individual, and the buyer either holds it, employs someone who does, or arranges for a qualified person — sometimes you — to be designated for a period. Settle this before terms are agreed, because it can change who the plausible buyers are.
- Will I have to stay on after the sale?
- Some transition is normal, often a few weeks of introductions and handover. A longer commitment usually appears for one of two reasons: the licence, or customer relationships that live with you. Both are worth fixing in advance if you would rather leave cleanly.
- Is my customer list worth anything on its own?
- Less than owners hope, unless the relationship is contractual. A list of people who once had a water heater replaced is marketing data. A book of agreements that renew is revenue, and buyers pay differently for the two.
This is general information, not investment, legal, tax or valuation advice. Every business and every transaction differs; take professional advice on your own circumstances before acting.