Selling your plumbing business to private equity

Where private equity stands in plumbing (2026)

Plumbing sits inside the same roll-up wave that has swept HVAC, and often it is folded into the very same platforms. A private equity firm builds a platform, usually HVAC-led, and then adds plumbing and electrical companies onto it so it can offer a homeowner more than one trade from the same brand and the same truck. The industry term for the second trade is an add-on, and plumbing is a common one because the customer overlap is nearly complete: the household that calls about a furnace also has pipes, water heaters, and drains.

What this means for you as an owner is that your likely buyer is not a plumbing-only firm but a multi-trade platform such as Apex Service Partners or Wrench Group, which already own HVAC operations and want plumbing for cross-sell. There is real money and there are real buyers, but the person across the table is a practiced acquirer, and for most owners it is a first and only sale. Understanding how they value and structure a deal levels the table a little.

What is my plumbing business worth?

Value starts from EBITDA, your earnings before interest, taxes, depreciation, and amortization, adjusted for owner pay and one-time costs. The buyer applies a multiple to that number. In 2026, reported ranges are roughly 2.4 to 4.0 times EBITDA for a smaller company bought as an add-on, and roughly 5.0 to 6.5 times for a larger company bought as a platform. These are ranges other sellers have reported, not an offer to you, and because plumbing is so often bought as an add-on, many owners are quoted from the lower band even when the business is strong.

A handful of factors move you toward the top of the range.

• Recurring service agreements and membership plans. Predictable maintenance and priority-service revenue is worth more than one-off jobs.
• A residential service and repair mix rather than new construction. Service work is steadier and higher margin, and buyers pay up for it.
• Fleet condition and technician retention. The platform is buying capacity, and licensed plumbers who stay are harder to replace than trucks and jetters.
• Clean books. Reviewed financials, clear job costing, and separated personal expenses shorten diligence and reduce late price cuts.

The valuation page explains EBITDA add-backs and the working capital peg, and the calculator turns a headline multiple into an after-tax figure.

How the deal is usually structured

The headline price is enterprise value, not your check. A typical plumbing deal pays around 60 to 70 percent in cash at close. A rollover stake, usually near 20 percent though it can range wider, is taken as equity in the buyer's holding company rather than cash. Another 5 to 10 percent is held in escrow for a year or more against problems found after closing. A working capital peg sits alongside all of this, requiring you to leave a set level of receivables and other working capital in the business, which can reduce the final number if you run lean.

On deals above roughly $10 million of enterprise value, representations and warranties insurance is common, shifting some risk from you to an insurer. Earnouts, where part of the price depends on hitting future targets, are common in agency deals but rare in the trades, so most plumbing sellers do not carry one. The deal terms glossary defines each term, and rollover equity covers the piece that stays at risk.

How you will be taxed

Most of your price is goodwill, taxed as long-term capital gain at 20 percent federal plus your state's rate. The part owners underestimate is depreciation recapture. If you wrote off trucks, jetters, cameras, and equipment using bonus depreciation or Section 179, the gain on those assets up to the amount you deducted is taxed as ordinary income under Section 1245, at up to 37 percent, and it is recognized in the year of sale. A plumbing business carries a fleet and a lot of equipment, so this ordinary-income slice is larger than it is for most sellers, and it is worth pinning down before you sign rather than after.

A covenant not to compete is also ordinary income to you, and consulting or transition pay is ordinary income plus payroll tax. The split between capital gain and ordinary income is set by the purchase price allocation in the contract, and the buyer is often indifferent to it while it costs you real money. The full mechanics, including the allocation form and the rollover's deferred tax, are on the how a sale is taxed page.

QSBS deserves an honest note. Section 1202 can exclude a large amount of federal gain, but only if your company was a C corporation when the stock was issued and for long enough after. The trades are not on the list of excluded fields, so a plumbing company generally can qualify if it is a C corporation. But most plumbing businesses are S corporations or LLCs, and those hold no QSBS at all. The real question for most sellers is whether a C-corp conversion happened years before the sale. It is fact-specific and needs a written CPA opinion, so do not assume it applies. The QSBS page walks through the two gates.

What changes after you sell

After closing, you hold a cash check and you no longer own your company. Most platforms want you to keep running the business for two to three years, but as an employee inside their system. Dispatch, pricing, purchasing, software, and hiring rules usually move to the platform's way of doing things. For an owner who is used to making every call, that loss of control is often harder than the change in money, and it is the part sellers most often underestimate.

Your income also changes. The salary and distributions the business paid you stop, replaced by a platform salary that is usually smaller, and by whatever the rollover pays someday. The rollover is a minority stake in a private, leveraged company you no longer control, and it may be worth more at the next sale or nothing at all. Plan your household around the cash you kept and treat any rollover payout as a bonus. The after-sale plan and managing rollover equity pages cover the money side.

Who should not sell right now

Selling to a platform is not right for every owner, and an offer has a way of making the decision feel already made.

• If your business still runs through you, and no one else can quote, dispatch, and manage the work, a couple of years spent building that team can lift your multiple more than the current offer is worth.
• If your revenue leans on new construction rather than recurring residential service, shifting the mix first can move you into a stronger price band.
• If you cannot see yourself taking direction inside another company's system for two to three years, the cash may not be worth the working conditions, and a sale to a family member or key employee may fit you better.
• If you would owe significant depreciation recapture and have no plan for the tax, closing before you understand the ordinary-income slice can cost you more than the preparation would.

What to do next

1. Clean up the numbers first

   Reviewed financials, clear job costing, personal expenses separated, and an honest picture of recurring service revenue. This is what lifts the multiple and speeds diligence, and it belongs before any buyer conversation.

2. Model the after-tax number

   Run your expected multiple through the calculator, and look closely at the depreciation recapture on your fleet and equipment, because that ordinary-income piece is larger for plumbing than most sellers expect.

3. Check the two QSBS gates early

   Ask your CPA whether the company is or ever was a C corporation, and get the answer in writing. If it always was an S corporation or LLC, set QSBS aside and focus on the allocation, the structure, and the after-sale plan. See QSBS.

4. Plan the money before the check lands

   Decide how the cash will replace your income and how you will treat the rollover, using the after-sale plan. When you want a second opinion, the contact page explains how a first conversation works, including when we will tell you that you do not need us.