EBITDA Multiples for Trades Businesses in Australia: What Buyers Actually Pay
Most sellers of trades businesses in Australia price their businesses between 2x and 4x EBITDA. Most buyers end up paying somewhere in that range, too. The problem is the spread within that range is enormous — and the difference between paying 2.2x and 3.8x for the same type of business can mean $200,000 or more on a mid-sized deal.
Understanding what drives that number — and what a fair multiple looks like for the specific business you're looking at — is one of the most important things you'll do in a deal. This article explains how EBITDA multiples work for Australian trades businesses, what the ranges look like by trade type, and what factors push the price up or down.
This is covered in depth in Module 4 of the Playbook — but here's the practical version for buyers in the field.
What Is an EBITDA Multiple?
An EBITDA multiple is the number you multiply a business's earnings by to arrive at its sale price. If a plumbing business makes $300,000 per year in EBITDA and the seller wants 3x, the asking price is $900,000.
EBITDA stands for Earnings Before Interest, Tax, Depreciation and Amortisation. It's used as a proxy for operating cash flow — what the business generates before financing and accounting decisions affect the bottom line.
For small, owner-operated trades businesses, buyers and brokers often use a variation called PEBITDA — "proprietor's EBITDA" — which adds back the owner's salary (and sometimes personal expenses) to get a cleaner picture of what the business earns regardless of how the owner pays themselves. EBITDA multiples are typically 0.5x to 0.7x higher than PEBITDA multiples for the same business, because PEBITDA includes a cost you'll have to replace (either by managing the business yourself or hiring someone).
The key question is: what earnings figure are you multiplying, and has it been properly normalised? See normalising EBITDA when buying a business for how to adjust the raw financials before you apply a multiple.
What EBITDA Multiples Do Trades Businesses Sell For in Australia?
Here are the realistic ranges for small trades businesses in Australia, based on businesses with EBITDA between $150,000 and $1,000,000:
Plumbing businesses: 2.0x to 3.5x EBITDA. Licensed trade, high barriers to entry, strong demand — but almost always owner-operated with significant key-person risk. Better-run operations with employed licensed tradespeople sit toward the upper end.
Electrical businesses: 2.0x to 3.5x EBITDA. Similar to plumbing. Commercial electrical contractors with recurring maintenance contracts trade at a premium over residential-only operators.
HVAC and air conditioning businesses: 2.5x to 4.0x EBITDA. The recurring service contract revenue (annual maintenance agreements) is what pulls the multiple up. A business with 60% contract revenue trades very differently from one that relies on new installs.
Landscaping businesses: 1.5x to 3.0x EBITDA. Lower barriers to entry, more competitive, seasonal cash flow — these factors compress multiples. Landscaping businesses with commercial contracts or council work trade better than residential-only.
Cleaning businesses: 1.5x to 3.0x EBITDA. Commercial cleaning with locked-in contracts (schools, offices, strata) trades better than residential cleaning. A lot of cleaning businesses have informal arrangements that don't survive due diligence.
Pest control businesses: 2.0x to 3.5x EBITDA. Licensing requirements and chemical compliance give these businesses natural moats. Termite inspection routes with recurring annual customers are the most sought-after.
Painting businesses: 1.5x to 2.5x EBITDA. Commoditised, difficult to differentiate, low barriers to entry. Painters who have moved into commercial or builder relationships get more credit than residential-only.
Concrete and fencing businesses: 1.5x to 2.5x EBITDA. Lumpy, project-based revenue drags multiples down. Equipment-heavy businesses trade closer to asset value than earnings multiples.
Roofing businesses: 2.0x to 3.0x EBITDA. Highly variable — restoration and re-roofing businesses with insurance-backed work trade better than new-build subcontractors.
The most useful cheat sheet I've found is the Industry Multiples Cheat Sheet, which covers the ranges across all the major trades with notes on what makes each one move.
What Drives the Multiple Up or Down?
The ranges above are starting points. The actual multiple a specific business commands depends on a handful of factors that matter far more than the trade type alone.
Recurring revenue. This is the single biggest driver of a premium multiple in any service business. If more than 40% of revenue comes back automatically — maintenance contracts, annual service agreements, scheduled programmes — expect to pay more. Buyers pay for predictability. A plumbing business with zero recurring work is worth less than one with a hospital maintenance contract, even if the EBITDA is identical.
Owner dependency. If the business cannot function without the owner answering every call, quoting every job, and managing every customer relationship, that's not a business — it's a job with a logo. Buyers discount heavily for key-person risk. Every step toward making the business genuinely operator-replaceable adds multiple. I looked at an electrical business last year where the owner's mobile was printed on every vehicle; that business sold at 2.0x. Another I'd seen two years earlier with a full-time operations manager and a structured quoting system went at 3.4x. Same EBITDA, different reality.
Team size and quality. Businesses with licensed, experienced, long-tenured employees are more valuable. High staff turnover is a major red flag — it usually signals a culture problem, a low-wage structure, or owner-dependency so extreme that staff feel powerless.
Customer concentration. If one customer accounts for more than 20% of revenue, most buyers will discount. Losing that customer in the first year would be catastrophic. See financial red flags when buying a business for how to spot this problem in the numbers.
Business size. Smaller businesses attract lower multiples, because they carry more risk and there's less cushion if something goes wrong. A trades business with $200,000 EBITDA will typically trade at a lower multiple than an identical business with $600,000 EBITDA — even if everything else is the same. This is sometimes called the "illiquidity discount" for micro-businesses. At the lower end (under $150,000 EBITDA), trades businesses sometimes sell on revenue multiples or asset value, not EBITDA at all.
Clean financials. If the seller's accountant struggles to produce three years of tax returns, or the figures shift around when you ask questions, buyers apply a discount or walk away. Clean, tax-lodged financials with consistent EBITDA give buyers confidence. Cash businesses with unverifiable revenue sit at the low end of the range — or don't sell at all.
How to Know If the Asking Price Is Fair
The asking multiple tells you what the seller wants. The right multiple is what the business actually supports given its earnings quality, risk profile, and the alternatives available to you as a buyer.
Three steps for calibration:
Step one: normalise first, then multiply. Don't apply a multiple to the seller's raw P&L. Add back or remove one-time items, adjust the owner's salary to market rate, and identify any personal expenses running through the business. How to value a small business in Australia walks through this process. The EBITDA you're multiplying should reflect what the business would earn under a new owner paying a market-rate manager.
Step two: benchmark against the trade type. Use the ranges above as reference. If a painting business is being offered at 4x and it has no contracts and no licensed employees, that's not a premium multiple — it's an optimistic seller.
Step three: adjust for the specific risk factors. Work through the drivers above: how recurring is the revenue, how owner-dependent is the business, how clean are the financials, what's the customer concentration? Each negative factor should bring your offer down; each positive factor justifies moving toward the top of the range.
The EBITDA Normalisation Checklist steps through the common add-backs you'll need to assess before applying a multiple.
Asset Sales vs Share Sales: Does It Change the Multiple?
In a share sale, you buy the company itself — all assets, liabilities, and history come with it. In an asset vs share sale, you're buying just the business assets.
For most small trades businesses, the answer is an asset sale — you buy the business name, equipment, customer list, and goodwill, but leave the company structure behind with the seller. That means the multiple is applied to the goodwill and business value, not the company balance sheet.
What matters here is working capital. In an asset sale, the cash and debtors often stay with the seller — you typically get the equipment, the contracts, and the name, then build working capital from day one of operating. Factor this into your total cost of acquisition, because you'll need operating capital beyond the purchase price to keep trading from week one.
FAQ
What is a good EBITDA multiple for buying a trades business in Australia? For most small to mid-sized trades businesses in Australia, 2x to 3.5x EBITDA is the normal range. Better-quality businesses with recurring revenue and employed licensed staff can reach 4x. Businesses with poor financials, owner dependency, or seasonal revenue often sell below 2x — or don't sell.
What is the EBITDA multiple for construction companies? General building and construction businesses typically trade at 1.5x to 3.0x EBITDA in Australia. Project-based revenue with no recurring contracts, thin margins, and subcontractor reliance compress multiples. Specialist contractors with long-term commercial relationships and a strong pipeline trade toward the top of the range.
What multiple of EBITDA is a business worth? It depends on the industry, business size, earnings quality, and market conditions. Trades businesses in Australia typically range from 1.5x to 4x EBITDA. Larger, better-quality businesses with predictable income command higher multiples; smaller, riskier, owner-dependent businesses sit at the lower end.
What is EBITDA when buying a business? EBITDA — Earnings Before Interest, Tax, Depreciation and Amortisation — is a measure of a business's operating profit before financing and non-cash accounting items. For small businesses, buyers often use PEBITDA (proprietor's EBITDA), which also adds back the owner's salary to see what the business earns independently of how the current owner pays themselves.
The Bottom Line
The multiple you pay is not a fixed number that falls out of a spreadsheet. It's a negotiated conclusion about how much risk you're taking and how much certainty the business offers.
The trades businesses that justify a premium multiple — 3x or above for a small business — are the ones that have done the hard work: built a team, locked in recurring revenue, documented their processes, and reduced the fingerprints of the owner. Everything else is buying yourself a job, and the multiple should reflect that.
The Industry Multiples Cheat Sheet gives you quick-reference ranges for 12 trades categories. Worth having in your back pocket when you're sitting across from a broker who quotes you a number and calls it "market".
For more on how to build the full picture before you make an offer, follow The Leveraged Worker newsletter — it's where I share the process of doing this in real time.