Short answer: HVAC businesses are still in demand in 2026, but buyers pay less than at the 2023 peak. As of December 2025, a mixed residential and commercial business with $3M to $5M in EBITDA sold for 5.5 to 7.5 times EBITDA, down from 6.5 to 9 times in 2023. Recurring service agreements and less dependence on the owner push the number up.
The HVAC Valuation Landscape Has Shifted
The HVAC industry has been one of the most actively traded sectors in the lower-middle market for the past decade. Private equity firms, strategic acquirers, and independent buyers have all competed aggressively for well-run HVAC businesses, driving valuations to levels that would have been unthinkable five years ago. But the landscape in 2026 looks meaningfully different from the peak of 2023-2024.
Interest rate increases, a normalization of post-pandemic demand, and increased supply of businesses coming to market have all contributed to a recalibration of valuation expectations. For HVAC business owners considering a sale, understanding these dynamics is essential to setting realistic expectations and positioning their business for the best possible outcome.
Why Have HVAC Valuations Come Down Since 2023?
Three primary factors are reshaping HVAC valuations. First, the cost of capital has increased substantially. When the federal funds rate sat near zero, buyers could finance acquisitions with cheap debt and pay higher multiples while still generating attractive returns. With rates stabilizing at higher levels, the math has changed. Buyers are more disciplined on price because their cost of capital demands it.
Second, the extraordinary demand surge driven by pandemic-era home improvement spending has normalized. HVAC companies that saw 20-30% revenue growth in 2021 and 2022 are now growing at 5-8%, which is healthy but does not support the premium multiples that peak-era growth commanded.
Third, the supply of HVAC businesses coming to market has increased. The wave of baby boomer retirements that industry observers have been predicting for years is now arriving in earnest. More businesses on the market means more options for buyers and less pricing pressure in the seller's favor.
What Are HVAC Businesses Selling For?
Every range below is a multiple of EBITDA, which is how buyers price a business that already runs without its owner. A smaller, owner-run shop is usually priced on seller's discretionary earnings instead, which adds the owner's own pay back in, so the two sets of multiples are not comparable. The valuation guide linked further down this article explains the difference.
Valuation multiples vary significantly based on business size, service mix, geographic market, and the quality of the management team. Here is how the current landscape breaks down for HVAC businesses by profile:
- Residential-only, owner-dependent ($500K-$1.5M EBITDA): 3.0-4.5x EBITDA. These businesses are heavily reliant on the owner for sales and customer relationships, which limits buyer interest and depresses multiples.
- Residential with service agreements ($1.5M-$3M EBITDA): 4.5-6.0x EBITDA. A meaningful base of maintenance agreements provides recurring revenue that buyers value highly. Businesses with 30%+ of revenue from service agreements consistently command premiums.
- Mixed residential and commercial ($3M-$5M EBITDA): 5.5-7.5x EBITDA. Diversification across residential and commercial end markets, combined with scale, puts these businesses in the sweet spot for PE-backed platforms looking for add-on acquisitions.
- Commercial-focused with design-build ($5M+ EBITDA): 6.5-8.5x EBITDA. Large commercial HVAC firms with engineering capabilities and long-term contracts are the most sought-after assets in the space, and multiples reflect that demand.
How Can an HVAC Owner Raise the Multiple?
Even in a normalized valuation environment, there are clear steps HVAC business owners can take to position their company at the top of the range. The most impactful is building a recurring revenue base through service and maintenance agreements. Buyers will pay a premium for predictable cash flows, and every dollar of recurring revenue is worth more than a dollar of project-based revenue.
Equally important is reducing owner dependence. If the business cannot operate for 30 days without the owner's daily involvement, the buyer pool narrows dramatically. Investing in a general manager or operations leader who can run the day-to-day business is one of the highest-return investments an owner can make in the 12-24 months before a sale.
Finally, owners should invest in their financial reporting. Buyers and their lenders will scrutinize the quality of earnings, and businesses with clean, accrual-basis financials prepared by an outside CPA firm consistently close faster and at higher valuations than those with cash-basis bookkeeping and commingled personal expenses.
If you are weighing an exit rather than just tracking the market, we walk through the whole process in How to Sell Your HVAC Business, including the real numbers from HVAC deals we closed. For the underlying method, see How Much Is Your Business Worth? And for one HVAC sale from start to close, see our Colorado HVAC case study.
Frequently asked questions
What is my HVAC business worth in 2026?
It depends mostly on size, service mix and how much the business depends on you. As of December 2025, buyers paid these multiples of EBITDA: residential and owner-dependent ($500K to $1.5M EBITDA), 3 to 4.5 times; residential with service agreements ($1.5M to $3M), 4.5 to 6 times; mixed residential and commercial ($3M to $5M), 5.5 to 7.5 times; commercial with design-build ($5M and up), 6.5 to 8.5 times.
Why have HVAC valuations come down since 2023?
Three reasons. Borrowing costs more, so buyers are stricter on price. Growth has cooled from 20 to 30 percent a year in 2021 and 2022 to 5 to 8 percent now. And more owners are retiring and selling, which gives buyers more choice.
Are HVAC businesses valued on EBITDA or seller's discretionary earnings?
The ranges in this article are multiples of EBITDA, which is how buyers price a business that already runs without its owner. A smaller, owner-run shop is usually priced on seller's discretionary earnings instead, which adds the owner's own pay back in. The two sets of multiples are not comparable.
How do service agreements affect an HVAC valuation?
They are the biggest lever. Buyers pay more for predictable cash flow, so a dollar of recurring maintenance revenue is worth more than a dollar of project work. Businesses with 30 percent or more of revenue from service agreements consistently command premiums.
How can I raise the value of my HVAC business before I sell?
Build recurring service revenue. Reduce how much the business depends on you, ideally with a general manager who runs the day to day. If it can't run for 30 days without you, the buyer pool narrows. And get clean, accrual-basis financials prepared by an outside CPA firm. Start 12 to 24 months before a sale.
Is 2026 still a good time to sell an HVAC business?
For a well-run business, yes. Multiples have come down from the peak but remain historically attractive, and HVAC is still one of the most attractive industries for acquisitions in the lower-middle market.
Looking Ahead
The HVAC sector remains one of the most attractive industries for acquisitions in the lower-middle market. Essential services, aging infrastructure, and the ongoing transition to energy-efficient systems provide a secular growth tailwind that will persist for years. Valuations have moderated, but they remain historically attractive for sellers who have built well-run businesses. The owners who prepare thoughtfully and engage experienced advisors will continue to achieve outcomes that reward their years of hard work.
