QoE & Sell-Side Prep for Home Services Companies
Home services is the roll-up story of the decade: private equity has decided that recurring service revenue with a truck attached is a beautiful thing. It is — as long as your books can prove the recurring part, rather than just insisting on it.
What a buyer is really paying for
A home-services buyer — often a PE-backed platform assembling a regional roll-up — is paying for durable, repeatable revenue. That means service memberships and maintenance agreements, a loyal repeat-customer base, and multiple trades or crews that keep producing without the owner running every job. The more of your revenue that recurs, and the cleaner you can prove it, the closer you get to platform-level pricing.
The problem is that most home-services books mix recurring memberships, one-off installs, and big-ticket replacements into a single revenue line. To a buyer, blended revenue is revenue they'll assume is mostly one-time, and one-time revenue is discounted. QoE prep restates revenue by type and quantifies the membership base so your durable revenue is priced as durable.
EBITDA is what the multiple attaches to, but for a home-services company the recurring-revenue proof and owner dependency decide how high that multiple goes.
Add-backs and the recurring-revenue story
The usual legitimate add-backs apply — above-market owner comp, personal vehicles, family on payroll, one-time marketing pushes. Each raises adjusted EBITDA when documented well enough to survive a buyer's accountant. But the swing factor is the recurring-revenue narrative: proving the membership and maintenance base with counts, renewals, and attrition, and showing the business runs on systems rather than on the owner personally.
We normalize owner costs, restate revenue into recurring versus one-time, quantify the membership base and its retention, and document how work gets dispatched and delivered — so a platform buyer sees a repeatable operation they can bolt onto their roll-up, not a job that happens to have employees.
How Kaizen runs it
We run a diligence-grade scan of your trailing twelve months, restate revenue into recurring memberships versus one-time work, quantify the membership base and retention, normalize owner comp and personal expenses, and build the Reported-to-Adjusted EBITDA bridge a buyer's QoE firm will respect. You get a workbook, a narrative memo, and a clean-up list of the things to fix before the buyer's team finds them.
The goal: present recurring revenue you can prove and an operation that doesn't depend on you, so a platform confirms the story instead of discounting it.
What's included
- Trailing-twelve-month Reported → Adjusted EBITDA bridge with support for every add-back
- Revenue restated into recurring memberships/agreements vs. one-time installs and replacements
- Membership and maintenance base quantified: counts, renewals, attrition, average value
- Owner compensation normalized to a market-rate replacement a buyer will accept
- Owner-dependency assessed — how much the business runs on systems vs. on you
- Customer and referral-source concentration analysis (buyers ask — have the answer ready)
- Working-capital peg estimate so the closing true-up doesn't ambush you
- Narrative QoE memo plus a defensible workbook you can hand to advisors
Pricing
Straight answers
Everyone says recurring revenue matters. How do I actually prove mine?
With data a buyer trusts: membership and agreement counts over time, renewal and attrition rates, and average value per account — not a percentage you cite from memory. Building that record is central to the engagement, because it's what turns your recurring-revenue claim into a priced asset.
The business kind of runs on me. Does that lower the price?
It does, because a buyer is wary of paying for revenue that walks out with the owner. We quantify the dependency honestly and document the systems that do exist, so a buyer prices the real situation — and so you can see what to delegate before you sell.
Isn't this what the buyer's QoE firm does anyway?
They do it to protect the buyer, and every dollar they reclassify from recurring to one-time lowers your price. Sell-side prep runs it first, on your side, so you set the anchor and they confirm it.
How far ahead of a sale should we start?
Ideally 6–12 months, so there's time to grow and document the membership base and reduce owner dependency while it reads as good management rather than pre-sale staging.
Related
Free 20-minute books assessment
We'll show you the five things we'd fix first in your books — useful whether you hire us, hire someone, or do neither.
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