Selling a plumbing business
Plumbing companies are valued on repeat service demand and the quality of the call flow that produces it. Buyers separate service and repair work from new construction, because the two have different margins, different collection cycles and different resilience when construction activity slows.
Written and reviewed by Antoine Campbell. Last reviewed .
Service work and new construction are different businesses
A company that is mostly service with some construction is underwritten very differently from the reverse.
| Service and repair | New construction | |
|---|---|---|
| Demand | Non-discretionary, steady | Cyclical, tied to building activity |
| Collection | At completion, often by card | Progress billing with retainage |
| Margin | Higher per hour | Thinner, volume driven |
| Risk | Technician capacity | Builder credit and cycle timing |
Where the calls come from
Call flow tied to the company is an asset. Call flow tied to the owner's personal reputation in a small town is harder to transfer and gets underwritten accordingly.
- Repeat residential customers and their referral behavior
- Property management and commercial maintenance contracts
- Home warranty company work, which is volume at compressed rates
- Online and directory lead sources, and what each costs per booked job
- Builder relationships, and how concentrated they are
Equipment and capability
Jetting trucks, camera and locating equipment, and trenchless capability are real value: they open higher-margin work that a van-only competitor cannot bid. Buyers will inventory the equipment, check its age and confirm what has been deferred.
Diligence items specific to plumbing
- State and municipal licensing, and who holds the master license
- Backflow and medical gas certifications where applicable
- Permit history and any open or failed inspections
- Warranty claims and any water-damage liability history
- Aged receivables, particularly builder and property management accounts
- Workers compensation experience modifier
What Maurant needs to evaluate this
- Three years of tax returns and current financials
- Revenue split between service, drain, commercial and new construction
- Technician roster with tenure and licensing
- Truck and equipment list with ages
- Lead sources with cost per booked job
- Aged receivables report
When Maurant is not the right buyer
- Companies dependent on a single builder for most revenue
- Owners who personally perform most of the billable work
- Businesses with unresolved water-damage claims
Questions owners ask
- Is home warranty work a negative?
- Not automatically. It is steady volume at low margin. It becomes a concern when it is most of the revenue.
- What if I hold the master license?
- It has to be solvable before closing. Rules vary by state, so we check the specific requirement early.
- How is my truck fleet valued?
- As part of the asset base, adjusted for age and deferred maintenance. Old fleets reduce price because they are a near-term capital need.
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