Meaning of SDE in HVAC Business for Sale

Sell Your HVAC Business. Step Into Freedom.

Create the Future You Deserve— It Starts with Selling Your HVAC Business

25+ Years of Success Selling HVAC Businesses: Exclusive Buyers. Maximum Value. Zero Upfront Fees.

• 92% Success Rate – Proven expertise in closing efficiently.
• Sell in as Fast as 90 Days – A streamlined, efficient process.
• 100% Confidential Sales – Protecting your business.
• Multiple Competitive Offers – Serious buyers waiting.

Book a Call for a Free Valuation

 

Now is the Perfect Time to Sell Your HVAC Business

Let Us Help You Get the Best Price

Why HVAC Business Owners Work with Sailfish Equity Advisors

What Sets Us Apart

Built for HVAC – We understand the financials, seasonality, licensing, and team structure that make HVAC businesses unique—and we know how to position that value for serious buyers.

From Shop Floor to Sale Price – Whether you’re still on the tools or managing a full install and service team, we create a custom exit plan that aligns with your goals and showcases your SDE clearly and confidently.

Beyond the Zip Code – While we know the Florida market inside and out, our buyer pool stretches nationwide—from individual operators to PE firms looking for high-margin service businesses like yours.

Ready to See What Your HVAC Business Is Worth?

Whether you’re planning your exit now or just want to know where you stand, we’ll give it to you straight. No pressure. No fluff. Just a clear, confidential valuation based on your real numbers and real potential.

Sailfish Equity Advisors
Experienced operators. Trusted advisors. Committed to your legacy.

Ask ChatGPT

 

Meaning of SDE in HVAC Business for Sale

Let’s get straight to the point. If you’re selling your HVAC business, there’s one number that determines your exit more than any other: SDE—Seller’s Discretionary Earnings. - What is my HVAC Business worth

You can talk about revenue, trucks, employee count, or contracts all day long—but if you can’t show a strong, well-documented SDE, you're going to leave money on the table.

This isn’t theory. This is deal-making 101. And if you're serious about getting top dollar for your HVAC business, understanding SDE is step one.

What Is SDE (Seller’s Discretionary Earnings)?

SDE is the total financial benefit an owner-operator pulls from the business annually. It tells buyers:
“If I run this HVAC company myself, how much can I realistically earn?”

This is the metric business brokers use to value owner-operated HVAC businesses—especially those doing under $5 million in revenue.

SDE vs. Net Income: Why They’re Not the Same

If you’re just looking at net income from your tax return, you’re not seeing the full picture.

HVAC business owners often run personal expenses through the company—vehicles, insurance, travel, meals. That’s normal. But those don’t reflect the actual earning potential of the business.

SDE fixes that by “adding back” those discretionary and one-time expenses to get to a number that reflects true owner benefit.

The SDE Formula (Specific to HVAC)

Let’s say your HVAC company reports:

• Net income: $120,000

• Owner’s salary: $80,000

• Owner’s personal vehicle expense: $10,000

• One-time truck purchase: $15,000

• Depreciation and interest: $12,000

• Travel to HVAC trade shows (owner only): $5,000

SDE = $120K + $80K + $10K + $15K + $12K + $5K = $242,000

That $242K is the number buyers use to determine what your business is worth.

How SDE Drives Valuation in an HVAC Business for Sale

Most HVAC businesses are valued using a multiple of SDE, not revenue. That multiple usually ranges between 2.5x and 4x, depending on:

• Size and stability of SDE

• Recurring revenue (maintenance contracts)

• Service vs install mix

• Owner’s involvement

• Team strength and licensing

• Equipment condition

• Market positioning and brand

Example:
If your SDE is $300,000 and the market supports a 3.3x multiple, your business might be valued at:
$300,000 x 3.3 = $990,000

Why SDE Matters So Much in the HVAC Industry

HVAC is a cashflow-heavy business with a lot of variables—seasonality, technician turnover, install spikes, etc. That’s why SDE is so critical:
It gives buyers a normalized view of your earnings power.

Buyers want to see:

• Is this business consistently profitable?

• Is the SDE climbing, flat, or falling?

• How much of this SDE depends on the owner being in the field?

This is exactly what Sailfish Equity Advisors evaluates during the pre-sale preparation phase. Because smart positioning of your SDE = higher offers and smoother negotiations.

Common Add-Backs in an HVAC Business

When business brokers recast financials, we look for defensible add-backs. For HVAC companies, that often includes:

• Owner’s salary and payroll taxes

• Health insurance premiums for the owner

• Personal auto expenses (used for business)

• Non-business travel or meals

• Legal/accounting for one-time events

• One-off equipment purchases

• Donations or sponsorships

The key is documentation. If it’s not clearly categorized and traceable, buyers may reject the add-back—and that lowers your valuation.

How to Prepare Your HVAC Business for Sale Using SDE

This is where most HVAC owners fumble the ball.

You can’t just “decide to sell” and expect top dollar. You need a game plan—and it starts with preparing your SDE.

Here’s what we coach HVAC business owners to do:

• Clean your books. QuickBooks can’t fix what hasn’t been recorded properly.

• Stop mixing personal and business expenses. Buyers want clean lines.

• Track every add-back. You need to be able to defend it.

• Get a professional recast. This is where a strong business broker makes all the difference.

At Sailfish Equity Advisors, we specialize in building accurate, bulletproof SDE profiles that increase your leverage in negotiations.

For Buyers: What to Look for in SDE When Evaluating an HVAC Business

If you're buying an HVAC business, SDE tells you what the seller is really making. But don’t just take the number at face value.

Ask:

• How much of the SDE is owner-dependent?

• Are the add-backs legitimate?

• Will you need to hire a manager or licensed tech to replace the owner?

• Are the vehicles and tools included in the deal?

SDE is your lens—but context is everything. That’s why we guide both sides through due diligence to make sure the story behind the numbers matches the real opportunity.

The Role of a Business Broker in HVAC Valuation

Not all business brokers understand the HVAC space. At Sailfish Equity Advisors, we do.

Here’s what we bring to the table:

• Industry-specific knowledge to evaluate install vs service revenue, license requirements, seasonality, etc.

• Accurate SDE recasting that includes field-specific expenses and equipment

• Confidential listing process to avoid employee or customer panic

• Access to qualified buyers, from individual operators to private equity

And most importantly—we know how to defend value, not just throw your listing on a website.

Why Work with Sailfish Equity Advisors

• 25+ years of experience selling service-based businesses

• Over 1,000 successful business sales

• Deep understanding of HVAC business operations, staffing, and SDE positioning

• Mission-driven, confidential, owner-focused approach

• Nationwide buyer reach with targeted outreach to HVAC-experienced buyers

We’re not here to “list” your business. We’re here to help you exit with purpose, confidence, and the full value you’ve earned.

Final Thoughts: SDE Isn’t Just a Number—It’s Your Exit Strategy

The difference between a $600K exit and a $1.2M payday often comes down to how well you present your SDE.

If you’re running a profitable HVAC company and thinking about selling, now is the time to get your numbers in order and build a strategy around them.

At Sailfish Equity Advisors, we help HVAC business owners do exactly that—confidentially, clearly, and without the nonsense.

You built it. We help you sell it for what it’s really worth.
Let’s talk.

Ask ChatGPT