Business Valuation Report — Briggs Mechanical Services LLC

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Business Valuation Report

Briggs Mechanical Services LLC

HVAC · TX · 14 years in business

Prepared: July 2, 2026 · Recipient: sample-solo@valueai.pro

Estimated Business Value

$2,134,704 – $3,013,700

Midpoint: $2,511,417

DCF Analysis · 40% weight $3,949,810

Market Multiples · 45% weight $1,081,800 – $2,103,500

Asset-Based · 15% weight $1,432,000

◆ Triangulated Value $2,511,417

The triangulated value is the weighted blend of the three methods above — it will typically sit below a strong DCF and above the asset floor. Weighting rationale in the appendix.

Valuation Factors

Three inputs directly affect your valuation multiples and discount rate. Each is shown below with its current status and exact impact on your result.

Key Person Dependency

▲ High — the business is substantially dependent on the owner

Valuation Impact

−30% on multiples

The 30% discount is already reflected in the multiples shown — your valuation is not separately reduced again. To put this in context: a comparable business with low key-person dependency would warrant approximately $682,564 more in the multiples-based estimate. Buyers view high owner-dependence as a major risk requiring price discount or earn-out structures. To address: develop a documented succession plan, transition key client relationships to other team members, and build operational independence from the owner.

Customer Concentration

▲ Moderate — top customer 16%, top 3 32%

Valuation Impact

−7% on multiples

The 7% discount is already reflected in the multiples shown — your valuation is not separately reduced again. To put this in context: a comparable diversified business would warrant approximately $112,543 more in the multiples-based estimate. To recover this: diversify the customer base, formalize multi-year contracts with the largest customer, and develop pipeline depth in adjacent client segments.

Recurring Revenue

35% of revenue is recurring

Valuation Impact

+0.42x on multiples

Meaningful recurring revenue. Multiples increased by approximately $252,420 (+0.42x SDE) and discount rate reduced by 0.7pt — a substantial portion of revenue is predictable, which buyers value.

Key Financials

Annual Revenue

$1,200,000

Net Profit

$390,000

SDE (Seller's Earnings)

$601,000

Owner Salary/Draw

$140,000

Profit Margin

32.5%

SDE Margin

50.1%

Revenue Trend & Net Profit

Bars: revenue · Gold line: net profit (years provided)

Valuation Analysis

EXECUTIVE SUMMARY The valuation range for Briggs Mechanical Services LLC is $2,134,704–$3,013,700, determined through a triangulation of Discounted Cash Flow (DCF), market multiples, and asset-based valuation methods. This range reflects the company's solid financial performance, tempered by significant key person dependency and moderate customer concentration risks. The triangulated value suggests a midpoint of $2,511,417, indicating a balanced view of the company's current market position and potential.

BUSINESS PROFILE & FINANCIAL HEALTH Briggs Mechanical Services LLC demonstrates a strong financial profile with an annual revenue of $1,200,000 and a net profit margin of 32.5%. The Seller's Discretionary Earnings (SDE) margin is notably high, reflecting efficient operations and strong profitability relative to industry norms. The revenue-to-expense ratio indicates effective cost management, contributing to the company's robust financial health. However, to align with industry top-quartile benchmarks, there is room for growth in recurring revenue streams.

VALUATION METHOD 1 — DCF ANALYSIS The DCF valuation of $3,949,810 is based on a 6.0% growth rate, reflecting the company's historical growth trend. The discount rate of 20.2% incorporates company-specific risks, including a 5.0% premium for key person dependency and a 1.0% premium for customer concentration. The terminal value of $1,856,231 was derived using these assumptions, emphasizing the importance of mitigating identified risks to enhance valuation.

VALUATION METHOD 2 — MARKET MULTIPLES The market multiples valuation range of $1,081,800–$2,103,500 is based on an SDE multiple range of 1.8x–3.5x, adjusted for the company's growth rate and key person risk. The lower end reflects the impact of these risks, while the upper end suggests potential if these issues are addressed. This range highlights the importance of operational improvements to achieve a higher valuation multiple.

VALUATION METHOD 3 — ASSET-BASED The asset-based valuation of $1,432,000 includes tangible assets valued at $230,000 and goodwill calculated at $1,202,000 (2.0x SDE). This method underscores the intrinsic value of the company's physical and intangible assets, providing a baseline valuation that supports the overall triangulated range.

INDUSTRY BENCHMARKS & COMPARISON Briggs Mechanical Services LLC's current growth rate of 6.9% and recurring revenue of 35.0% fall short of the HVAC industry's top-quartile targets of 12% growth and 50% recurring revenue. Key risks include labor shortages and technician retention, while value drivers such as maintenance agreements and commercial contracts offer growth potential. Aligning with industry benchmarks could significantly enhance the company's attractiveness to potential buyers.

GROWTH SCENARIOS The growth scenarios project potential valuations based on industry-anchored growth rates: Industry median (5.0%) at $3,810,195, Above-median trajectory (8.5%) at $4,319,088, and Top-quartile 24-month target (12.0%) at $4,887,671. To reach the top-quartile scenario, the owner should focus on increasing recurring revenue and expanding commercial contracts.

STRATEGIC RECOMMENDATIONS

Develop a robust transition plan to mitigate key person dependency, including process documentation and relationship transfer strategies.
Increase recurring revenue to 50% by expanding maintenance agreements and service contracts.
Target a 12% annual revenue growth by diversifying the customer base and pursuing commercial contracts.
Invest in CRM/dispatch software to enhance operational efficiency and appeal to institutional buyers.

BUYER PROFILE (a) Likely buyer archetypes: Potential buyers include regional HVAC companies seeking expansion, private equity firms interested in roll-up strategies, and strategic acquirers looking for established operations in Texas. (b) Why each archetype would buy this specific business: Regional HVAC companies may value the $1,200,000 revenue and established market presence. Private equity firms could be attracted by the $601,000 SDE and potential for operational improvements. Strategic acquirers might see value in the 14-year operating history and existing customer relationships. (c) Realistic buyer pool size: Moderate, due to geographic and operational constraints, but expanded by the business's established presence and financial performance. (d) What buyers will scrutinize hardest: Buyers will focus on the high owner dependency, moderate customer concentration, and the sustainability of current revenue streams. They will also evaluate the potential for increasing recurring revenue and operational scalability. (e) Deal structure & mechanics: This will likely be an asset sale, common in HVAC transactions, with potential earnout provisions tied to revenue targets. A transition period of 6-12 months may be expected to ensure continuity. (f) Industry M&A dynamics: The HVAC industry is experiencing active consolidation, driven by private equity roll-ups and strategic acquisitions. Buyers are particularly interested in businesses with strong recurring revenue and operational maturity, often paying premiums for companies with established teams and systems in place.

DCF — 5-Year Cash Flow Projections

Period	Projected FCF	Growth Rate	Present Value
Year 1	$637,060	6.0%	$530,000
Year 2	$675,284	6.0%	$467,388
Year 3	$715,801	6.0%	$412,172
Year 4	$758,749	6.0%	$363,480
Year 5	$804,274	6.0%	$320,539
Terminal Value (PV)	Gordon Growth Model @ 2.5% terminal growth		$1,856,231
Total DCF Value			$3,949,810

Growth rate: 6.0% | Discount rate: 20.2% (build-up method)

Discount Rate — Build-Up Method

Risk-free rate (T-bills)4.4%

Equity risk premium5.5%

Small company premium5.0%

▲ Key person dependency risk+5.0%

▲ Customer concentration risk+1.0%

● Recurring revenue reduces risk−0.7%

Total Discount Rate20.2%

Company-specific risk adds 5.3% to the base rate, directly reducing the DCF value. Addressing these factors before a sale would lower the discount rate and increase business value.

Market Multiples — HVAC Benchmarks

Multiple Basis	Range	This Business	Value Range
Revenue Multiple	0.29x – 0.56x	$1,200,000	$348,000 – $672,000
SDE Multiple (Primary)	1.8x – 3.5x	$601,000	$1,081,800 – $2,103,500

Industry: HVAC | Typical buyers: Individual operators, local investors

Asset-Based Valuation Breakdown

Equipment & FF&E

$185,000

Inventory

$45,000

Goodwill (2.0x SDE)

$1,202,000

Real Estate — excluded, sold separately

$720,000

Total Asset Value

$1,432,000

Real estate (estimated $720,000) is owned by the seller and being sold separately. It is excluded from the operating-business asset total because the buyer of the business will not acquire the property.

DCF Sensitivity — Growth Rate Scenarios

How to read this chart. These are DCF-method values under three growth assumptions, NOT the headline triangulated valuation of $2,511,417 shown above. The triangulated value blends DCF (40% weight), Market Multiples (45%), and Asset-Based (15%) — so DCF alone typically runs higher than triangulated for profitable businesses. Use this chart to see how growth-rate changes affect the DCF component.

Growth rates anchored to HVAC industry benchmarks. The "24-month target" is when a top-quartile peer would achieve the growth rate; the 5-year DCF then projects that growth rate sustained over the projection horizon (with a terminal-value tail). The top-quartile target matches the "Reach top-quartile growth" recommendation in the Valuation Scenario Planner below.

Industry median $3,810,195

Maintaining typical industry growth pace (5.0% annual growth, yr5 revenue: $1,531,538)

Above-median trajectory $4,319,088

Operational improvements lifting growth above the industry median (8.5% annual growth, yr5 revenue: $1,804,388)

Top-quartile (24-month target) $4,887,671

Reaching top-quartile peer performance through targeted improvements (12.0% annual growth, yr5 revenue: $2,114,810)

Adjusted Valuation

—

Interactive Tool

Valuation Scenario Planner

Adjust the controls below to model both improvements and risks — like taking on a large new client that would raise concentration. Each control's row shows the dollar impact of the move: green for gains, red for costs.

Adjusted Valuation

← adjust controls below to see impact

Revenue Growth Rate

—

current

-25%0%+25%+50%+75%+100%

Modeled annual growth used in DCF projections.

Key Person Dependency

—

Customer Concentration

— Diversified

Top customer % of revenue

0% — Diversified

current

0%15%30%45%60%

Top 3 customers combined %

0% — Diversified

current

0%25%50%75%100%

Recurring Revenue %

—

current

0%25%50%75%100%

Your highest-ROI improvements, ranked

Targets reflect conservative top-quartile achievement for HVAC businesses over a typical 24-month advisor-led plan. Sourced from public industry research (ServiceTitan 2024 contractor benchmarks + ACCA reports). Your specific situation may warrant different targets — discuss with your advisor.

Valuation Scenario

Top Improvement Opportunities

Estimated impact of each improvement starting from today's baseline of $2,511,417. Improvements are independent — combined impact would be higher.

#	Action	Est. Impact
1	Reduce key person dependency to Low	+$1,076,322
2	Grow revenue by 25%	+$627,854
3	Diversify customer base (no single customer >15%)	+$279,046
4	Grow recurring revenue to 50%+	+$131,849

Use the interactive Valuation Scenario Planner at https://valueai.pro/report/66 to model specific scenarios in real time.

Appendix

Methodology & Calculations

All figures derived from data
provided at time of submission

How this valuation was produced. Every number in this report is computed by a deterministic financial engine using the formulas shown in this appendix — DCF, market multiples, and asset-based methods with explicit risk adjustments. AI is used only to write the narrative commentary; it does not calculate, adjust, or influence any valuation figure. Market multiples are calibrated against BizBuySell reported small-business transactions (~9,500 sales), applied through the industry profile that best matches this business; industry benchmarks cite their sources in the relevant sections. The risk-free rate is fetched live from Federal Reserve (FRED) data.

1 · Seller's Discretionary Earnings (SDE)

SDE represents the total economic benefit available to a working owner-buyer. It normalizes owner compensation AND adds back personal expenses run through the business so the valuation reflects true earning power regardless of how the owner chooses to pay themselves.

Annual Revenue	$1,200,000
Total Business Expenses	− $810,000
Net Profit	$390,000
Add back: Owner Compensation	+ $140,000
Reported SDE (net profit + owner compensation)	$530,000
Recurring Add-Backs (apply to all years)
Owner's health insurance through business	+ $14,000
Owner's retirement contributions	+ $18,000
Personal vehicle expenses	+ $9,000
Personal phone/travel/meals/entertainment	+ $6,000
Rent Normalization (apply to all years)
Above-market rent — add back excess (actual $66,000 vs. market $42,000)	+ $24,000
Normalized SDE (used for valuation)	$601,000

Add-backs are personal/discretionary expenses run through the business that buyers add back when assessing true earning power. Recurring add-backs apply to historical years for trend analysis; one-time add-backs apply only to the current year so they don't distort the trend. Rent normalization adjusts SDE to reflect what an arms-length tenant would pay (rent paid to a related entity owned by the seller), so the operating-business value reflects true earning power independent of who owns the real estate.

1b · Earnings History & Volatility

Buyers value earnings predictability. The 3-year SDE history below shows the consistency of earning power. Recurring add-backs apply to all years (consistency assumption); one-time add-backs apply only to the current year.

2 years ago — Normalized SDE	$526,000
1 year ago — Normalized SDE	$566,000
Current year — Recurring SDE (excludes one-time add-backs)	$601,000
Earnings consistency (coefficient of variation)	5.4% — stable

Earnings have been steady (CV under 10%) — no additional volatility risk premium is applied. Buyers value predictable earnings.

2 · DCF Discount Rate — Build-Up Method

The discount rate represents the return a buyer would require to justify purchasing this business, given its risk profile. Calculated using the standard build-up method.

Risk-free rate (10-yr Treasury)	4.4%
Equity risk premium	5.5%
Small company premium	5.0%
▲ Key person dependency risk (High)	+5.0%
▲ Customer concentration risk (Moderate)	+1.0%
● Recurring revenue reduces risk (35% recurring)	−0.7%
Total Discount Rate	20.2%

3 · Discounted Cash Flow (DCF) Valuation

Projects future earnings and discounts them to present value using the risk-adjusted discount rate. Growth rate: 6.0% | Terminal growth rate: 2.5%

Period	Projected FCF	Present Value
Year 1	$637,060	$530,000
Year 2	$675,284	$467,388
Year 3	$715,801	$412,172
Year 4	$758,749	$363,480
Year 5	$804,274	$320,539
Terminal Value (PV)	—	$1,856,231
DCF Value		$3,949,810

4 · Market Multiples Valuation

Applies transaction multiples from comparable business sales in the HVAC industry. The industry baseline is then adjusted for revenue trend, key person risk, customer concentration, and recurring revenue. Each adjustment compounds — the final adjusted multiple is what produces the value range below.

Industry baseline SDE multiple range	2.0x – 4.5x
Industry baseline revenue multiple range	0.30x – 0.70x
Key person risk adjustment (multiplicative)	×0.70 (−30%)
Customer concentration adjustment (multiplicative)	×0.93 (−7%)
Recurring revenue premium (additive)	+0.42x SDE
Final adjusted SDE multiple range	1.8x – 3.5x
SDE-based value range (final SDE multiple × $601,000)	$1,081,800 – $2,103,500
Revenue-based value range (final revenue multiple × $1,200,000)	$348,000 – $672,000
Market Multiples Value (SDE-based, primary)	$1,081,800 – $2,103,500

SDE-based multiples are the primary basis for triangulation; revenue-based multiples are shown as a cross-check. The risk adjustments above are already incorporated into the final multiple — they are not re-applied to the value range or to the triangulated valuation.

5 · Asset-Based Floor Value

Represents the minimum value of the business based on tangible and estimated intangible assets. Typically used as a floor — the business should be worth at least this even if earnings are minimal.

Equipment value	$185,000
Inventory value	$45,000
Goodwill estimate (2x SDE)	$1,202,000
Real estate — excluded, sold separately	$720,000
Asset-Based Floor Value	$1,432,000

Real estate (estimated $720,000) is owned by the seller and being sold separately. It is excluded from this floor value because the buyer of the operating business will not acquire the property; the property's value accrues to the seller through the separate real estate transaction.

Goodwill multiplier calibrated against BizBuySell 2025 small business transaction data (~9,500 reported sales across 100+ industries). For hvac businesses, 2x SDE reflects typical residual goodwill after tangible assets are accounted for separately.

6 · Triangulated Valuation

The final valuation is a weighted average of the three methods, with weights reflecting the reliability of each method for this business profile.

DCF value	40% weight	$3,949,810
Market multiples midpoint	45% weight	$1,592,650
Asset-based floor	15% weight	$1,432,000
Triangulated Value		$2,511,417

Estimated range: $2,134,704 – $3,013,700 · All values reflect data as submitted. See disclaimer below.

Why these weights. Market multiples carry the largest weight (45%) because businesses of this size trade primarily on comparable-sale evidence — what buyers have actually paid for similar earnings. DCF (40%) is the forward-looking check: it rewards durable growth but is sensitive to projection assumptions, so it is not weighted first. The asset-based method (15%) acts as a value floor rather than a primary driver for a profitable operating business.

Range Sensitivity Summary

The estimated range of $2,134,704 – $3,013,700 is derived from the triangulated midpoint of $2,511,417 by stress-testing key assumptions across plausible scenarios:

Assumption	Base Case	Low Case	High Case
Growth rate	6.0%	3.0%	9.0%
Discount rate	20.2%	18.2%	22.2%
Market multiples	Risk-adjusted base	−5% contraction	+5% expansion

This produces an asymmetric band of −15% to +20% around the midpoint — standard practice reflecting that downside scenarios (tighter credit, slower growth, buyer discounting) tend to compress value more than upside scenarios expand it. Risk adjustments for key person dependency and customer concentration are already embedded in the base case multiples and discount rate above.

Methodology note. Risk-factor adjustments shown above are applied as direct multiplier reductions for transparency, so the impact of each factor is visible to the reader. A formal USPAP-compliant business appraisal would typically incorporate these risks via the company-specific risk premium (CSRP) within the discount-rate build-up rather than as a separate flat-multiple discount. The valuation effects converge to similar magnitudes, but the underlying methodologies differ. Consult a credentialed appraiser (ABV, ASA, CVA, or equivalent) for any transaction, dispute, tax filing, or other situation requiring a defensible valuation.

Appendix

7 · Submitted Inputs

All inputs provided at the time of submission. These are the exact values used to generate this report. If any figure appears incorrect, contact support@valueai.pro to request a corrected report.

Business Overview
Business name	Briggs Mechanical Services LLC
Industry	HVAC
State / location	TX
Years in business	14 years
Number of employees	8
Business structure / entity type	Sole Proprietor / Single-member LLC
Financials
Annual revenue	$1,200,000
Annual expenses	$810,000
Net profit	$390,000
Owner compensation (salary / draws / guaranteed payments)	$140,000
Owner add-backs (sum of recurring + one-time)	$47,000
Rent normalization adjustment	+$24,000
Normalized SDE (used for valuation)	$601,000
Revenue history (2yr ago → 1yr ago → current)	$1,050,000 → $1,135,000 → $1,200,000
Revenue CAGR (calculated)	+6.9%
Net profit history (2yr ago → 1yr ago)	$315,000 → $355,000
Earnings volatility (CV)	5.4% (stable)
Risk Factors
Key person dependency	High — the business is largely me
Customer concentration	top customer 16% of revenue; top 3 32%
Recurring revenue	35.0% of revenue
Assets & Property
Location ownership	Owns building
Current annual rent paid	$66,000
Estimated market annual rent	$42,000
Rent paid to related entity	Yes (LLC controlled by owner)
Equipment value	$185,000
Inventory value	$45,000
Owns real estate	Yes (selling separately)
Intellectual property	No
Valuation Parameters
Risk-free rate used	4.4% (live — Federal Reserve)
Discount rate (calculated)	20.2%
Report generated	July 2, 2026

Disclaimer

This report is generated for informational and planning purposes only and does not constitute a formal business appraisal, financial advice, legal opinion, or tax advice. It is not a recommendation to buy, sell, or hold any business interest, security, insurance product, or other financial instrument. Valuations are based on the financial data provided by the submitter and publicly available industry benchmarks. Actual market value may vary based on due diligence findings, current market conditions, buyer/seller motivations, and factors not disclosed in this analysis. For any transaction, partnership dispute, tax filing, litigation, regulatory matter, or other situation requiring a defensible valuation, engage a credentialed business appraiser (ABV, ASA, CVA, or equivalent) or qualified attorney.