Crew-based businesses live and die on utilization. Model billable hours, labor multiplier, crew-level EBITDA, and the breakeven utilization you need to survive before you buy.
Field services businesses — HVAC, electrical, plumbing, landscaping, commercial cleaning, IT field support — are labor arbitrage machines. You pay a crew a loaded hourly cost and bill their time out at a multiple of that cost. The two numbers that decide whether the business makes money are utilization (what share of paid hours are actually billable) and the labor multiplier (how much more you charge than you pay). Everything else is overhead drag.
The critical trap for buyers: you pay your crew for every available hour whether or not it's billed. Idle time is a pure loss. A business at 55% utilization is leaving nearly half its labor cost uncovered, and small swings in utilization move EBITDA dramatically because the labor cost is effectively fixed in the short run.
| Metric | What it means | Benchmark range |
|---|---|---|
| Utilization | Billable hours ÷ available hours | >70% strong; 60–70% average; <60% weak |
| Labor Multiplier | Billing rate ÷ fully-loaded labor cost | 2.5–3.5x healthy; <2x too thin |
| Gross Margin | Revenue after labor and materials | 30–50% for trade services |
| EBITDA Margin | Operating profit after overhead | 10–20% for well-run services |
| Revenue / Crew | Annual billings per billable tech | $120k–$220k depending on rate |
| EV / EBITDA | Acquisition multiple | 3–5x for independent services firms |
The breakeven utilization figure above is the utilization rate at which EBITDA hits zero — where billings exactly cover labor, materials, and overhead. The gap between your actual utilization and breakeven is your cushion. A business running at 65% utilization with a 58% breakeven has only 7 points of safety; lose two technicians' worth of billable work to a slow season and you're underwater. Look for a cushion of at least 10 points.
Get the job-costing and timesheet data, not just the P&L — utilization is easy to overstate and the only way to verify it is hour-by-hour records. Understand customer concentration and whether revenue is recurring (service contracts) or project-based; recurring maintenance agreements are worth a premium because they smooth utilization. Check the technician roster for licenses, tenure, and any non-competes — in trade businesses the crew is the asset, and a master electrician or lead tech walking out the door can take the revenue with them. Finally, review the fleet and equipment condition and any deferred maintenance you'll inherit.
Use the LBO Model to layer acquisition debt on top of these crew economics and size the equity check.
An editable Excel workbook — 5-year income statement, balance sheet, cash flow, DCF + exit-multiple valuation, and a deal tab with debt schedule, IRR & MOIC. Pre-filled with the inputs above; every assumption recalculates.
A good acquisition model connects operating drivers to cash flow, debt capacity, and the price you can afford. Use this guide with the calculator to move from a seller story to a buyer-grade view of risk and return.
Seller numbers often include owner choices, one-time costs, unusual salaries, and expenses that may or may not continue after closing. Normalize earnings before applying a multiple, then document each add-back so the lender, investor, or seller can challenge it clearly.
For field services, normalize owner labor, vehicle costs, unbilled travel time, callbacks, subcontractor mix, and true payroll burden.
The right drivers depend on the business model. For this category, pay close attention to technician utilization, billable rate, dispatch efficiency, recurring service revenue, crew capacity, route density, and labor retention. Small changes in those assumptions can move cash flow more than the headline revenue number suggests.
Use the calculator as a first pass, then pressure-test downside cases. A deal that only works in the base case usually needs a lower price, more seller financing, or a more conservative debt structure.
Most buyers focus on price and ignore the cash needed on day one. Inventory, receivables, deposits, payroll timing, and vendor terms can make a profitable business feel cash poor after closing.
Debt capacity should be based on durable free cash flow after owner replacement cost, taxes, capital spending, and working capital needs. If the debt service coverage ratio is thin, the deal may require more equity even if the multiple looks reasonable.
Before you issue an LOI, look for owner-led sales, weak technician bench, poor job costing, low repeat revenue, unpriced warranty work, and fleet or equipment that needs replacement. These do not automatically kill a deal, but they should change the diligence plan and the structure of the offer.
The safest offers tie price to evidence. Use seller notes, earnouts, holdbacks, working-capital pegs, and closing conditions when the risk is real but still measurable.
Use recent comparable deals only as a starting point. The right multiple depends on durability, owner dependence, growth, margin quality, customer concentration, and how much debt the business can safely support.
Earnings and free cash flow matter most for most small acquisitions. Revenue multiples can help in software, content, and high-growth models, but they still need to reconcile to profit and cash conversion.
A buyer normally expects enough normalized working capital to operate the business without an immediate cash injection. Calculate it from historical monthly balances, not just the latest balance sheet.
Walk when the seller cannot support revenue, margins, add-backs, customer quality, or working capital with evidence. A deal that depends on trust instead of records deserves a lower price or no bid.