Thinking About Selling? Start Here.
Most business owners have never sold a company. The process feels complicated, the language is foreign, and it's hard to know who to trust. This page walks through everything plainly and without the jargon.
UNDERSTANDING THE NUMBERS
What Is EBITDA and Why Does It Matter?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. In plain English: it's how much cash the business actually generates each year, before accountants and bankers start making adjustments.
It's the number that buyers, including AEP, use as the foundation for valuing a business. Once we know the business’ EBITDA, we apply a 'multiple' to arrive at a purchase price.
For most home services and essential services businesses, multiples typically range from 3× to 6× EBITDA. The specific multiple depends on the size, quality, and growth trajectory of the business.
WHAT DRIVES YOUR MULTIPLE?
Understand What Drives Buyers to Pay More or Less.
A business’ EBITDA tells buyers how much the business earns. The multiple tells them how confident they are it will keep earning that. These factors drive that confidence or erode it.
FACTORS THAT INCREASE YOUR MULTIPLE
Recurring Revenue
Service contracts and maintenance agreements signal predictable future cash flow. Buyers pay a premium for it.
Runs Without You
If the business can operate while the owner takes a two-week vacation, it's worth more. Owner dependency is the single biggest discount factor.
Clean Financials
Three years of organized, consistent books. No surprises in due diligence. Every dollar accounted for.
Diversified Customers
No single customer makes up more than 10–15% of revenue.
Strong Team In Place
Long-tenured technicians, a solid ops lead, key management. A team that stays is a business that survives the transition.
Growing Revenue
A business growing 15% year over year commands a meaningfully higher multiple than one that's flat.
FACTORS THAT DECREASE YOUR MULTIPLE
Heavy Owner Dependency
The owner holds all the customer relationships, does all the estimates, handles every escalation. This is the most common reason multiples drop.
Customer Concentration
One client representing 30%+ of revenue is a significant risk. If they leave post-close, the value leaves with them.
Messy Books
Inconsistent records, missing invoices, or unclear owner expenses slow due diligence and give buyers reason to reduce their offer.
Aging Equipment
Deferred maintenance shows up as risk. Buyers discount for capital they'll need to spend after close.
High Turnover of Staff
If the business cycles through technicians, buyers see training costs, lower productivity, and cultural risk.
Verbal Agreements
Customer contracts on a handshake, undocumented vendor terms. Buyers want paper.
KEY TERMS EXPLAINED
Learn Them Before A Business Goes To Market.
Buyers and their advisors use a lot of shorthand. Here's a plain-language reference for the terms that come up most often in a transaction.
EBITDA
Earnings Before Interest, Taxes, Depreciation & Amortization. The most common way buyers measure profitability. Think of it as the cash the business generates each year before accountants get involved.
SDE (Seller's Discretionary Earnings)
Similar to EBITDA, but adds back the owner's salary and personal perks run through the business. More commonly used for smaller businesses under $1M in profit.
Multiple
The number buyer’s multiply EBITDA by to arrive at business value. A business with $500K EBITDA selling at a 4× multiple is worth $2M. Home services multiples typically range from 3× to 6×.
LOI (Letter of Intent)
The written offer a buyer sends after initial discussions. It outlines the purchase price, deal structure, and key terms. LOIs are typically non-binding except for exclusivity. It kicks off the due diligence process.
Due Diligence
The buyer's formal review of your business: financials, customer contracts, employee records, equipment, legal history. Think of it as the buyer doing their homework before writing a check. The cleaner your records, the faster it goes.
Add-backs
Adjustments made to your financial statements to show true business profitability. Common add-backs: owner salary above market rate, personal vehicle, family members on payroll, one-time expenses. This is legitimate and expected.
Working Capital
The cash needed to run the business day-to-day. Most deals include a working capital target so the buyer gets a business that's ready to operate from day one.
Earnout
A portion of the purchase price tied to future performance. Example: $2M at closing, plus up to $500K over two years if revenue hits certain targets. Earnouts can bridge valuation gaps but add complexity. Be sure to understand the terms carefully.
Non-Compete
An agreement that prevents the seller from starting or working for a competing business for a defined period (typically 2–5 years) within a defined geography. Standard in virtually every deal.
Asset Sale vs. Stock Sale
Two ways to structure the transaction. In an asset sale, the buyer purchases the business assets. In a stock sale, they buy the company entity outright. The tax treatment differs significantly. Speak with to a CPA.
Quality of Earnings (QoE)
A third-party analysis of your financial statements, typically ordered by the buyer. It validates your revenue and EBITDA claims and identifies any concerns. Common in deals above $2M.
THE PROCESS, STEP BY STEP
What Actually Happens When You Sell.
Every deal is different, but the sequence is predictable. Here's what to expect from the first conversation to the day funds hit your account.
1
Decide You're Ready…or at Least Curious
You don't need to have made a final decision to start learning. Most owners begin by quietly exploring what their business might be worth. There's no obligation in a first conversation with AEP, and nothing gets set in motion until you say so.
2
Get Your Financials In Order
Pull three years of tax returns and profit & loss statements. If your bookkeeping has been inconsistent, a few months with a good accountant goes a long way. Clean books speed the process and protect your valuation.
3
Understand What Your Business Is Worth
AEP will give you a free, no-obligation indication of value early in the process, before any paperwork. Use our online valuation tool for a quick estimate, or schedule a call for a more detailed conversation. Timeframe: 1–2 weeks.
4
Receive and Negotiate a Letter of Intent (LOI)
The LOI is AEP's written offer: price, structure, timeline, and key terms. Don't sign the first one you see without review. Ask questions. Have an attorney look at it. This document shapes everything that follows. Timeframe: 2–4 weeks
5
Due Diligence
AEP reviews your business in detail: financials, operations, customers, employees, equipment, legal history. Stay organized and responsive. The cleaner your records, the faster this goes. Typical timeframe: 30–60 days.
6
Close
Final purchase agreement is signed, funds are wired, and the business changes hands. You'll typically spend 30–90 days in transition, introducing AEP to key relationships and ensuring a clean handoff. The whole process is typically 3–6 months.
Frequently Asked Questions
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Not necessarily. Brokers typically charge 8–12% of the sale price as their commission. If you're selling directly to AEP, there's no broker involved — which means you keep more of the proceeds. If you prefer to run a broader process with multiple buyers competing, a broker can help with that. Either way, make sure whoever you engage has specific experience selling businesses in your sector.
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In almost every deal, no. Confidentiality is standard practice. We sign an NDA before you share any financial information, and the transaction is kept private until closing. A good buyer will want your employees to hear the news from you, in your words, at the right moment — typically right at or after close.
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Plan for 3–6 months from first conversation to closing day. The biggest variable is how clean and organized your financials are — messy books slow everything down. The LOI process is typically 2–4 weeks. Due diligence is usually 30–60 days. Then 2–4 weeks for final legal documents and funding.
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This is extremely common and nothing to be embarrassed about. Part of preparing your financials for sale is 'recasting' them — identifying and adding back owner-specific expenses like a personal vehicle, cell phone, family members on payroll, above-market owner salary, or one-time expenses that won't continue post-close. A good buyer has seen this before and handles it professionally. Just be honest about what's there.
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Usually for a transition period, yes — but it's negotiable. Most buyers want 30–90 days of your time post-close to ensure a smooth handoff. Beyond that, it varies by deal. Some sellers choose to stay in an advisory or operational role for a year or more. Others walk away on closing day. Be honest with yourself about what you want, and make sure it's written clearly into the agreement.
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In a well-run transition, your customers may not notice anything changed. The phone number stays the same. The brand often stays the same. The technicians they know stay. What changes is who owns the business behind the scenes. AEP understands that the customer relationship is the most valuable thing we're acquiring — and we protect it carefully.
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Talk to a CPA before you sign anything. Generally, proceeds from selling a business held for more than a year are taxed as long-term capital gains — significantly lower than ordinary income rates. How the deal is structured (asset sale vs. stock sale) affects your tax bill meaningfully. A good M&A accountant pays for themselves many times over.
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It happens. Buyers typically look at 2–3 years of financials and weight recent performance most heavily — but context matters. If the bad year was due to a one-time event, explain it clearly and document it. A single down year won't kill a deal if the underlying business is sound. What hurts more is a business that's been declining for three years with no clear explanation.