What multiple do trades businesses (plumbing, electrical) typically sell for in Canada?
Plumbing and electrical contracting businesses in Canada typically sell for 2.5x to 4.0x EBITDA, with the multiple determined primarily by service mix, contract type, and operational transferability.
Typical EBITDA Multiples for Trades Businesses in Canada
Trades businesses in Canada commonly sell in the 2.5x to 4.0x EBITDA range. Residential service-focused operations — emergency plumbing, residential electrical — typically fall at the lower end (2.5x–3.0x EBITDA). Commercial and industrial contractors with recurring maintenance contracts command multiples at the higher end (3.5x–4.5x EBITDA).
Revenue multiples are less reliable than EBITDA multiples due to wide variation in profit margins, but typically range from 0.4x to 0.8x annual revenue. For very small trades businesses under $1M in revenue where the owner is heavily involved in daily operations, Seller's Discretionary Earnings (SDE) is sometimes used, with typical multiples of 2.0x–3.0x SDE.
How Plumbing Businesses Are Valued
According to the M&A Source Middle Market Report 2023, plumbing businesses with both service and new construction work are generally more attractive to buyers than pure service operations, as they demonstrate diversified revenue streams. Businesses with documented systems, training manuals, and clear operational procedures commonly command premiums of 10–15% over businesses operating primarily on owner knowledge.
Owner-operator businesses where the owner is also the primary licensed tradesperson typically see valuation discounts of 15–25% due to key person risk. The presence of journeyman and apprentice tradespeople (not just the owner) increases business transferability and this suggests the workforce structure can add meaningfully to the EBITDA multiple.
How Electrical Contracting Businesses Are Valued
Electrical contracting businesses with specialized capabilities — industrial automation, solar installation, EV charging infrastructure — commonly command multiples 20–30% above standard residential electrical contractors. Customer concentration risk significantly impacts valuation: trades businesses where a single customer represents more than 20% of revenue typically see multiple reductions of 0.5x–1.0x.
Among Advisor Standard profiles with disclosed vertical information, 23% list trades or construction as a focus vertical.
What Drives Multiples Higher in Trades
Recurring service contracts — annual maintenance agreements, facility management contracts — commonly add 0.5x to 1.0x to the base EBITDA multiple. Some practitioners report that equipment ownership (trucks, specialized tools) rather than leasing can add 5–10% in valuation premiums due to the asset base and lower ongoing capital requirements for the buyer.
Diversified revenue streams, documented operational systems, and a workforce that includes licensed journeymen and apprentices all contribute to higher transferability and stronger multiples.
What Pulls Multiples Lower
Key person risk — where the owner holds the primary license and performs most technical work — typically reduces multiples by 15–25%. Customer concentration, particularly a single customer representing more than 20% of revenue, commonly reduces multiples by 0.5x–1.0x. Pure residential service businesses without commercial or industrial components typically fall at the lower end of the 2.5x–4.0x range.
Revenue vs. EBITDA Multiples
EBITDA multiples are the standard valuation approach for trades businesses in Canada. Revenue multiples (typically 0.4x–0.8x) are less reliable due to wide variation in profit margins across different service types, contract structures, and operational efficiency. Buyers focus on normalized EBITDA because it reflects actual earning power after adjusting for owner compensation and discretionary expenses.
Regional Variation Within Canada
Ontario and Alberta trades businesses typically command slightly higher multiples (by 0.2x–0.5x) than comparable businesses in Atlantic provinces due to market size and growth dynamics. This regional premium reflects both buyer demand concentration and the higher growth rates in major urban markets. Regional differences are less pronounced for businesses with strong recurring contract bases or specialized capabilities, where transferable earnings drive valuation more than location.
This article is for informational purposes only and does not constitute financial, legal, or business advice. Every business sale is different. Before making decisions about valuation, pricing, or engaging an advisor, consult a qualified professional familiar with your specific situation.
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