How to sell a plumbing business: the steps, the documents, the timeline and what hurts the price

Part of the Plumbing guide: buying, selling, valuation and who is buying.

This guide is for the owner of a plumbing company who wants to sell in the next year or two and has never sold a business before. By the end you will know the eight steps and which documents a buyer will ask for. You will also know how long each stage takes, how advisors charge, and the five things that cut the price most. It is part of our plumbing buying and selling guide.

Step 1: When should you start, and what is the business worth today?

Start 12 to 24 months before the day you want to hand over the keys. Buyers pay for the last three years of results, so the work you do now shows up in the price later.

Plumbing companies are priced as a multiple of earnings. Under about $2 million the measure is SDE (your profit plus your own salary and perks); above that it is adjusted EBITDA. The multiple rises with size. IBBA's Q4 2025 Market Pulse gives these averages across all industries:

These are all-industry figures, not plumbing figures. We are building plumbing-specific data from the listings our system reads every day and will publish it in this guide when the sample is large enough. Until then, treat the table as a range. A plumbing company with recurring service revenue and a licensed team tends to sit toward the top of its band; a one-truck owner-operator sits toward the bottom.

Step 2: How do you get the licence off your own name?

In most states the plumbing licence belongs to a person, not the company. If that person is you, a buyer who is not a master plumber cannot run the business the day after closing. This is the single biggest plumbing-specific problem in a sale, so fix it first.

The rules differ by state. Two examples:

• Texas. A plumbing company works under a Responsible Master Plumber. The Texas State Board of Plumbing Examiners says an RMP must hold a current master plumber licence, carry at least $300,000 of commercial liability insurance, and may be the RMP of record for only one company at a time (TSBPE).
• Florida. A business organization contracts through a licensed qualifying agent. Under Florida Statute 489.119, if the only qualifying agent leaves, the company has 60 days to employ another one (Florida Legislature).

The practical fix is to have a second master plumber on staff, named as the licence holder of record, at least a year before the sale. That person then stays through the hand-over. Check your own state board's rules, and talk to a lawyer about how the licence, permits and bonds move to a new owner. Some states also require the buyer to re-apply in their own name.

Step 3: Which documents will a buyer ask for?

Gather these before you talk to anyone. A seller who has them ready looks organised, and organised sellers get fewer price cuts in diligence.

1. Three years of business tax returns, plus the current year's P&L and balance sheet.
2. Monthly P&L for the last 36 months, so a buyer can see seasonality.
3. Job and ticket data from your field software: jobs per month, average ticket, service versus install versus new construction.
4. Service agreements and membership plans: how many, what they cost, renewal rate.
5. A list of your top 20 customers with revenue per customer per year.
6. Licence and permit records for the company and every licensed plumber.
7. The vehicle list with year, mileage, owned or leased, and any loans on them.
8. Employee roster with role, licence level, pay, tenure, and any employment agreements.
9. Leases, insurance policies, and any open claims, warranty issues or lawsuits.
10. A short list of add-backs: personal expenses run through the business, with proof for each.

Larger buyers will want a quality of earnings report that ties your P&L to your bank statements. SBA lenders now order one on deals of $3 million or more. Clean monthly books make that review quick and cheap.

Step 4: What hurts the price most?

Five things come up in almost every plumbing deal that trades below its band.

Owner dependence. If you hold the licence, sell every big job and know every customer, the buyer is buying a job, not a business. Hire the second licence holder, put a dispatcher and a lead technician in place, and take two weeks off before you list. If the phone still gets answered, you have something to sell.

New construction and project revenue. A year of big plumbing contracts for a home builder looks great on the P&L and worries buyers. It depends on one or two builders and on the building cycle. Service, repair and remodel work from many households is worth more per dollar of profit, because it repeats.

Customer concentration. One builder, property manager or facility over about 20 to 25% of revenue is a risk the buyer will price in. Spread the work before you sell, or expect part of the price to come as an earn-out tied to that account staying.

No membership plan. A service agreement base (annual water-heater flush, drain inspection, priority service) is recurring revenue a buyer can count. A company with none is worth less than one with the same profit and a thousand members.

Dirty books. Cash jobs that never hit the P&L cannot be sold. Personal trucks, family on payroll and one QuickBooks file for two businesses all cut the multiple, because the buyer and the lender value what they can prove.

Step 5: How do you find buyers without the staff and customers finding out?

Confidentiality is most of the job. Your technicians can leave, your builders can switch, and your competitors will talk if the sale becomes public.

An advisor writes a one-page blind summary (no name, no town) and a full confidential information memorandum. The full document goes only to buyers who sign an NDA and show they can pay. Who those buyers are depends on size. A one- or two-truck shop usually goes to an individual buyer with an SBA loan. A company with $1 million or more of earnings draws private-equity backed plumbing platforms and regional strategics, who are buying add-ons across the country. The hub above lists who is active.

Bring in the lender's view early. Most individual buyers borrow through an SBA 7(a) loan. A business whose earnings cover the loan payments with room to spare sells faster. The seller is usually asked to carry a seller note for part of the price.

Step 6: What happens between the offer and closing?

Three stages, in order.

Letter of intent. Buyers submit offers; you pick one and sign an LOI with the price, the structure (cash, seller note, earn-out), the exclusivity period and what is included. Trucks, inventory and the service agreements should be named.

Due diligence. The buyer and their lender now have 30 to 60 days to prove the numbers. They will tie the P&L to bank statements, call some customers late in the process, check every licence and permit, and read the vehicle titles and leases. Problems found here are usually solved by structure, not by walking away: a larger seller note, or an earn-out on the risky revenue.

Purchase agreement and close. Lawyers draft the agreement, the lender funds, the licence holder of record and the permits move to the buyer, and the money moves through escrow. Expect to stay for a transition period of 30 to 90 days, and to sign a non-compete.

Step 7: Asset sale or stock sale, and what will you keep after tax?

Most plumbing deals under $5 million are asset sales: the buyer takes the trucks, tools, customer list, name and goodwill, and you keep the legal entity and its old liabilities. A stock sale moves the whole company, licences and history included, which a buyer may prefer when permits and contracts are hard to re-assign. The differences are explained in our asset sale versus stock sale note.

In an asset sale both sides file IRS Form 8594 and split the price across seven asset classes. They run from cash through vehicles and equipment to goodwill; the IRS instructions list them. The split decides how much of your gain is taxed as ordinary income and how much as capital gain. Agree it in the LOI, and have a CPA run the numbers before you sign, not after.

Step 8: How long does it take, and what does it cost?

These are ranges we see, not promises; a clean company with a licence holder in place closes at the short end.

On fees: a business broker is usually paid a success fee as a percentage of the sale price, sometimes with a retainer. The percentage falls as the deal gets bigger. An M&A advisor on a larger deal usually charges a monthly retainer plus a success fee. Ask for the fee agreement in writing before you sign anything, and ask what happens if you bring your own buyer. Add your CPA and lawyer on top; on a small deal those two together often cost more than owners expect. At Acquisitions.com we agree the fee up front and put it in one page.

The market for your trade is not going away. The Bureau of Labor Statistics puts the median wage for plumbers, pipefitters and steamfitters at $63,800 in May 2025. It projects employment to grow 7% from 2025 to 2035, faster than the average for all occupations (BLS). That shortage is why buyers pay more for a company with licensed plumbers on the roster. They pay less for one where the licence walks out the door with the owner.