{"id":22034,"date":"2023-03-16T12:35:09","date_gmt":"2023-03-16T19:35:09","guid":{"rendered":"https:\/\/firstpagesage.com\/?p=21725"},"modified":"2023-03-16T12:35:09","modified_gmt":"2023-03-16T19:35:09","slug":"service-company-ebitda-valuation-multiples-report","status":"publish","type":"post","link":"https:\/\/redesign.fpsclients.com\/wp\/service-company-ebitda-valuation-multiples-report\/","title":{"rendered":"Service Company EBITDA & Valuation Multiples: 2023 Report"},"content":{"rendered":"

Our analysts compiled publicly available data on various service company M&A transactions ranging from Q1 2022 to Q1 2023 to determine average valuation multiples. We present them in the tables below, which cover both EBITDA multiples and revenue multiples and subdivide the data by level of earnings.\u00a0<\/span><\/p>\n

For context on the M&A market for services companies in 2023, see our summary below.\u00a0<\/span><\/p>\n

Service Company Valuation Multiples: EBITDA<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Company Type<\/b><\/td>\nEBITDA Range<\/b><\/td>\n<\/tr>\n
$1-3M<\/b><\/td>\n$3-5M<\/b><\/td>\n$5-10M<\/b><\/td>\n<\/tr>\n
Aviation<\/b><\/td>\n6.3x<\/span><\/i><\/td>\n8.5x<\/span><\/i><\/td>\n10.1x<\/span><\/i><\/td>\n<\/tr>\n
Consulting<\/b><\/td>\n3.9x<\/span><\/i><\/td>\n6x<\/span><\/i><\/td>\n8.4x<\/span><\/i><\/td>\n<\/tr>\n
Engineering<\/b><\/td>\n4.4x<\/span><\/i><\/td>\n6.8x<\/span><\/i><\/td>\n9.1x<\/span><\/i><\/td>\n<\/tr>\n
Entertainment<\/b><\/td>\n4.1x<\/span><\/i><\/td>\n5.8x<\/span><\/i><\/td>\n8.5x<\/span><\/i><\/td>\n<\/tr>\n
HVAC<\/b><\/td>\n4.8x<\/span><\/i><\/td>\n7.8x<\/span><\/i><\/td>\n9x<\/span><\/i><\/td>\n<\/tr>\n
Insurance<\/b><\/td>\n4.6x<\/span><\/i><\/td>\n6.3x<\/span><\/i><\/td>\n9.4x<\/span><\/i><\/td>\n<\/tr>\n
Legal<\/b><\/td>\n5.2x<\/span><\/i><\/td>\n6.9x<\/span><\/i><\/td>\n10x<\/span><\/i><\/td>\n<\/tr>\n
Medical<\/b><\/td>\n5x<\/span><\/i><\/td>\n6.6x<\/span><\/i><\/td>\n8.8x<\/span><\/i><\/td>\n<\/tr>\n
Pest Control<\/b><\/td>\n4.7x<\/span><\/i><\/td>\n5.9x<\/span><\/i><\/td>\n7.3x<\/span><\/i><\/td>\n<\/tr>\n
Security<\/b><\/td>\n4.2x<\/span><\/i><\/td>\n6.4x<\/span><\/i><\/td>\n7.8x<\/span><\/i><\/td>\n<\/tr>\n
Staffing\/Recruiting<\/b><\/td>\n4.3x<\/span><\/i><\/td>\n6x<\/span><\/i><\/td>\n7.1x<\/span><\/i><\/td>\n<\/tr>\n
Transportation<\/b><\/td>\n4.5x<\/span><\/i><\/td>\n5.7x<\/span><\/i><\/td>\n8x<\/span><\/i><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Service Company Valuation Multiples: Revenue<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Company Type<\/b><\/td>\nRevenue Range<\/b><\/td>\n<\/tr>\n
$1-5M<\/b><\/td>\n$6-10M<\/b><\/td>\n$10-75M<\/b><\/td>\n<\/tr>\n
Aviation<\/b><\/td>\n3.1x<\/span><\/td>\n4.2x<\/span><\/td>\n6x<\/span><\/td>\n<\/tr>\n
Consulting<\/b><\/td>\n1.4x<\/span><\/td>\n2.1x<\/span><\/td>\n2.4x<\/span><\/td>\n<\/tr>\n
Engineering<\/b><\/td>\n2.9x<\/span><\/td>\n3.8x<\/span><\/td>\n4.9x<\/span><\/td>\n<\/tr>\n
Entertainment<\/b><\/td>\n1.4x<\/span><\/td>\n2.5x<\/span><\/td>\n5.1x<\/span><\/td>\n<\/tr>\n
HVAC<\/b><\/td>\n2.6x<\/span><\/td>\n3.5x<\/span><\/td>\n4.8x<\/span><\/td>\n<\/tr>\n
Insurance<\/b><\/td>\n3x<\/span><\/td>\n3.7x<\/span><\/td>\n4.5x<\/span><\/td>\n<\/tr>\n
Legal<\/b><\/td>\n2.1x<\/span><\/td>\n2.4x<\/span><\/td>\n3.4x<\/span><\/td>\n<\/tr>\n
Medical<\/b><\/td>\n1.8x<\/span><\/td>\n3.1x<\/span><\/td>\n5x<\/span><\/td>\n<\/tr>\n
Pest Control<\/b><\/td>\n1.6x<\/span><\/td>\n2.3x<\/span><\/td>\n3x<\/span><\/td>\n<\/tr>\n
Security<\/b><\/td>\n2.2x<\/span><\/td>\n3.5x<\/span><\/td>\n4.8x<\/span><\/td>\n<\/tr>\n
Staffing\/Recruiting<\/b><\/td>\n1.9x<\/span><\/td>\n2.3x<\/span><\/td>\n2.9x<\/span><\/td>\n<\/tr>\n
Transportation<\/b><\/td>\n2.4x<\/span><\/td>\n2.9x<\/span><\/td>\n3.7x<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The sections that follow provide an executive-level summary of the current M&A environment for service companies in addition to considerations for selling a service company in these conditions.\u00a0<\/span><\/p>\n

Understanding Service Company Valuations in 2023<\/b><\/h2>\n

Service companies saw volatile ups and downs between 2020 and 2023, with EBITDA multiples ranging from 6-25x during that time, depending on the sector. Some industries have been relatively stable, and have even preserved their 2021 increases, particularly home services.\u00a0<\/span><\/p>\n

For example, midsize HVAC companies are seeing EBITDA multiples in the range of 8x, up more than 20% from 2019, and haven\u2019t seen much fluctuation when interest rates rose in 2022. In contrast, sectors that thrived during the pandemic, such as marketing, saw more fluctuation \u2013 from 4-6x in 2019 to 8-11.5x in 2021 to 2.5-5x in 2023. <\/span>
\n<\/span>
\n<\/span>Despite the variance in service company valuation multiples across industries, we can make the following observations for services as a whole by amalgamating M&A market reports from industries in which service companies make up the majority of the market (e.g., legal, medical, and transportation):<\/span><\/b><\/p>\n