HVAC Business Valuation Calculator

This HVAC Business Valuation Calculator allows you to estimate the financial worth or value of your HVAC business by inputting key financial metrics like annual revenue, number of employees, average revenue per customer, and growth rate.

What is an HVAC business valuation calculator?

An HVAC business valuation calculator is a tool used to estimate the financial worth or value of a business. It usually requires specific details about your business, like annual revenue, number of employees, average revenue per customer, and growth rate. This lets the calculator determine the overall value of a business based on key financial metrics and standard performance indicators.

Who uses an HVAC business valuation calculator?

Many business owners, analysts, investors, and lenders in the HVAC industry use an HVAC business valuation calculator. This tool helps assess the value and performance of HVAC-based businesses for better decision-making. Owners plan strategies, analysts evaluate viability, investors look at opportunities, and lenders determine loan terms. An HVAC business valuation calculator is an essential tool for optimizing HVAC business value.

What information is included in an HVAC business valuation calculator?

To effectively use an HVAC business valuation calculator, you’ll need have the following information on hand:

1. Annual Overhead: The total ongoing expenses of operating your business.
2. Number of HVAC Technicians: The total number of technicians on your payroll.
3. Average Holidays per HVAC Technician per Year: The average number of holiday days each technician takes annually.
4. Average Vacation Days per HVAC Technician per Year: The average number of vacation days each technician takes annually.
5. Average Billable Hour Efficiency: The percentage of total work hours that are billable.
6. Average Hourly Rate per HVAC Technician: The average wage you pay each technician per hour.
7. Desired Net Profit: Your profit margin goal, represented as a percentage of sales.

Formulas Used in the HVAC Business Valuation Calculator:

Calculating how well each job will pay off should only take a few seconds. Enter the cost of your materials and all expenses, along with what you’re charging, and you’re left with your profit margin. After each job, you’ll easily spot if you misjudged how much work something would take, if you spent more on materials than you planned, or if your expenses are eating into your profits.

1. Gross Profit

GP = AR − COS 

Where:

– GP is the Gross Profit. 

– AR is Annual Revenue.

– COS is Cost of Sales.

2. Net Profit

Net Profit = Gross Profit – (Overhead Expenses + Cost of Technician + Cost of Office Staff)

where:

Cost of Technician = (How many technicians work at your company * Avg. monthly salary of a technician) * 12

Cost of Technician = (How many office staff work at your company * Avg. monthly Salary of an office staff) * 12

3. Estimated Business Valuation

Estimated Company Value = (Net Profit + Total value of company’s assets)* Company valuation multiplier 

Example of How to Calculate Business Valuation  

Annual Revenue (AR): $1,000,000

Cost of Sales Last Year (COS): $400,000

Overhead Expenses (OE): $200,000

Total Value of Company’s Assets (VA): $300,000

Company valuation multiplier (M): 5 

How many technicians work at your company: 5

Avg. monthly salary of a technician: 2,000

How many office staff work at your company:  5

Avg. monthly Salary of an office staff: 1,000

Calculations:

1. Gross Profit (GP) 

GP = $1,000,000 – $400,000 = $600,000

2. Net Profit

Net Profit =  $600,000 – ($200,000 + $120,000 + $60,000) = $220,000

3. Estimated Business Value 

Estimated Business  Value = ($220,000 + $300,000) * 5 = $2,600,000