Key takeaways
- In a trades business the value sits in the technicians, the lead flow and the service agreements, in that order, and all three can walk.
- Check that licences, certifications and permits transfer and that the business can operate legally the day after closing.
- Marketing is a transferable asset only if the business owns its website, its reviews, its phone numbers and its advertising accounts.
- Expect to pay for owner dependence unless a lead technician or manager already runs the day-to-day.
Heating, plumbing, electrical, roofing and the other home service trades make attractive acquisitions in British Columbia. Demand is steady, work is local, and much of it is repair and maintenance that cannot be deferred for long. Ali's agencies have built more than 150 live HVAC websites and run marketing for trades companies for years, so we have seen the inside of many of these businesses and know where the value is and where it leaks.
This guide covers what to check before buying a trades or home services business, in the order a buyer should check it. Licensing and employment questions belong with your lawyer, and the numbers with your CPA. The operational questions are ours.
Licences, permits and insurance
Trades are regulated. Depending on the trade, the business may need provincial or municipal licences, certified technicians on staff, gas or electrical permits, and registration with safety and workers' compensation bodies. Find out which licences belong to the company and which belong to the owner personally, because a licence held by the owner leaves with the owner. Find out what the buyer must hold to continue operating and how long it takes to obtain.
Review insurance, including liability, vehicle and any bonding, and ask about claims history. Ask for the workers' compensation account status and whether a clearance letter is available. A business that cannot operate legally on the day after closing is not a business you can buy on the agreed timeline.
Technicians and the owner
The technicians are the business. Review the list with tenure, certifications, pay and any written agreements. Ask how many are employees and how many are subcontractors, and have your lawyer advise on what that means. Ask who the customers ask for by name. Then ask the hard question about the owner: are they the lead technician, the estimator, the dispatcher, the salesperson, or all four?
A trades business where the owner does the estimating and the customers call the owner's cell phone has not been separated from its owner, and the price should reflect it. One with a service manager, a dispatcher and technicians who can quote their own jobs is a different business. Plan how you will retain the key people, and what a transition period from the owner needs to include.
Where the leads come from
Ask for a breakdown of jobs by source for the past two years: repeat customers, referrals, the website, paid search, directories, property managers, builders and anything else. Then verify that the business owns the assets behind each source. The website domain, the online reviews, the phone numbers, the paid advertising accounts and the social profiles should all be in the company's name, not the owner's, and the logins should transfer at closing.
Marketing assets built over years are a real and transferable part of the value, and they are also the first thing to deteriorate if nobody manages them. If the business depends on a single lead source, treat that as concentration. If it depends on the owner's personal reputation, treat it as owner dependence.
- Jobs and revenue by lead source for two years
- Ownership and transfer of domain, website, reviews, phone numbers and ad accounts
- Service agreements and maintenance plans, with renewal rates
- Relationships with builders, property managers and strata councils, and whether they are contracted
- Warranty obligations on past installations that you will inherit
Service agreements, warranties and seasonality
Recurring service and maintenance agreements are the most valuable revenue in a trades business, because they produce predictable work and the first call when something fails. Count them, check the renewal rate and read the terms. Then look at warranty obligations on past work, which in an asset sale you may or may not assume and in a share sale you will. Ask what has gone wrong in the past and what it cost.
Many trades are seasonal. Review monthly results across at least two years so you understand the cash flow pattern, and plan working capital for the quiet months. A heating business bought in autumn and a cooling business bought in spring look very different six months later.
Price, structure and the first year
Trades businesses are usually valued on seller's discretionary earnings when the owner works in the field, and on EBITDA when there is a management layer. Equipment and vehicles matter, so get an inspection and a replacement schedule. Structure follows the usual questions for your lawyer and CPA, with particular attention to employee transfer and warranty liabilities.
In the first year, keep the technicians, keep the lead flow running and keep the service agreements renewing. Everything else can wait. If you are evaluating a trades business in BC, call or text (604) 632-4959. Ali has spent years inside this industry and can tell you quickly whether what you are looking at is a business or a job.