Facility Management Company Valuation
29 valuation methods · 43 industries · Results in under 10 minutes
In short
A facility management company is valued on its earnings. A smaller owner-run firm is valued on a blend that includes seller's discretionary earnings, and a larger one on a discounted cash flow, comparable companies, precedent transactions and a bottom-up view. Contract terms and self-performed work shape the value.
Who this is for
Owners of facility management and integrated facility services companies that run buildings for commercial, industrial and institutional clients, preparing to sell, bring in a partner or plan succession, and buyers who need contract earnings separated from pass-through costs.
How is a facility management company valued?
For a smaller owner-run firm, VA blends seller's discretionary earnings, EBITDA plus the owner's pay, times a multiple drawn from small-business transaction data, with a discounted cash flow, comparable companies, precedent transactions and a bottom-up view of the firm's own economics. A larger firm is valued on the last four alone. Earnings are taken after the add-backs you confirm, and an asset floor keeps the result above what the company's own assets would recover. This tool is informational only. Output is driven by your inputs and does not constitute a formal appraisal or certified valuation.
What drives the value of a facility management company?
- Multi-year contracts, their renewal history and how they are priced
- The share of work the company performs itself against work it subcontracts and passes through
- Customer concentration, and how long the largest clients have stayed
- Site managers and supervisors who run accounts without the owner
- Workforce stability, wage rates and how contracts pass wage increases to clients
- Systems for work orders, compliance and reporting that clients rely on
What lowers the value of a facility management company?
- Fixed-price contracts that cannot pass on wage increases
- Thin margins on subcontracted, pass-through work
- One client making up much of the revenue
- Contracts up for rebid soon after the sale
How much is a facility management company worth? A worked example
A facility management company, by discounted cash flow
Take a facility management company with $10 M of revenue and a 7% EBITDA margin, or $700 K of EBITDA. Assume revenue grows 5% a year for five years, capital spending and depreciation each run at 1% of revenue, working capital takes 12% of each year's added revenue and tax is 25%. Cash flows are discounted at 18%, the lowest rate VA uses for a company this size, with 2.5% growth after year five. VA's discounted cash flow gives about $2.85 M before debt, or 4.1× EBITDA. If wage increases cut the margin to 5%, it comes to about $1.76 M. In a full report for a company this size, precedent transactions carry the most weight.
Illustrative figures from VA's discounted cash flow alone, on the assumptions stated. A full report blends it with the industry's other methods, such as comparable companies and precedent transactions.
Value your facility management company in under 10 minutes
- 1.Upload your financial statements, or type the figures in.
- 2.Confirm the add-backs and the industry details the model asks for.
- 3.Get a valuation range, the methods behind it and a PDF memorandum.
Which numbers matter most?
Normalized EBITDA
EBITDA after the add-backs you confirm. Comparable companies and precedent transactions apply their multiples to it, and the discounted cash flow starts from it.
Contract renewal history
The share of contracts that renewed at the end of their term. Buyers read it as the best sign the earnings will hold.
Self-performed share
The part of revenue from work the company does with its own staff. Subcontracted work passes through at a thin margin.
Top client share
The part of revenue from the largest client. Buyers price concentration closely.
Gross margin by contract
What each contract earns after labor and subcontractors. Buyers look for contracts priced below cost.
What do you need to value a facility management company?
- Profit and loss statements and balance sheets, ideally for the last three years
- Figures for the current year to date
- A list of add-backs: the owner's pay and perks, and any one-off costs
- Loan and lease balances
- A list of contracts with terms, renewal dates and pricing
- Revenue and gross margin by contract, split between self-performed and subcontracted work
- Headcount and wage rates by site
Example scenarios
Revenue that passes through
Two companies bill the same. One does most of the work with its own staff; the other subcontracts most of it and adds a margin. Their revenue looks alike, but the first keeps more of each dollar, and the earnings the model values show it.
Wage increases a contract cannot pass on
A company signed fixed-price contracts and wages rose. Its margin falls until the contracts reprice. The worked example shows what a lower margin does to the discounted cash flow.
Further reading
Business Valuation Methods Explained: DCF vs. Comps vs. Precedent Transactions
The five business valuation methods professionals actually use (DCF, comparable companies, precedent transactions, SDE/EBITDA multiples, and asset-based), when each wins, and how they combine into one defensible number.
WACC Explained: Why Your Discount Rate Can Make or Break a Valuation
WACC is one of the most misunderstood terms in business valuation. Here's what it is, why it matters, and how it directly affects what your business is worth.
DCF Analysis Explained for Private Companies
A clear, practical guide to discounted cash flow analysis for private companies. Learn the five key steps, how to estimate WACC without public market data, terminal value approaches, and common pitfalls to avoid.
Frequently asked questions
How is a facility management company valued?
On its earnings. A smaller owner-run firm is valued on a blend that includes seller's discretionary earnings; a larger one on a discounted cash flow, comparable companies, precedent transactions and a bottom-up view of its economics.
Does pass-through revenue count?
It counts in revenue but adds little to earnings, and the model values earnings. Buyers look at margins on self-performed work, because that is where the profit is.
Do multi-year contracts raise the value?
They make the earnings easier to keep, which buyers pay for. The model has no separate layer for them, so buyers judge them by term, renewal history and how they reprice.
Does customer concentration lower the value?
The model values the earnings you enter. Buyers pay less when one client makes up much of the revenue, because losing that contract would change the business.
What if I pay myself less than a manager would cost?
Then your earnings overstate what a buyer who hires a manager would keep, and a buyer will deduct the difference. Set your pay at a manager's salary when you review the adjustments, so the result reflects what a buyer would pay.
Is this a certified appraisal?
No. This is an informational estimate. A bank loan, a partner buyout or an estate matter may require a certified business appraisal, which this does not replace.
Terms used on this page
- Normalized EBITDA
- EBITDA after add-backs, so it shows what the business earns in a normal year under a new owner.
- Add-backs
- Costs added back to reported earnings because a new owner would not bear them: personal expenses run through the business, one-off costs, or owner pay above what the role would cost to fill.
- Discounted cash flow (DCF)
- A valuation that projects the cash a business will generate over the coming years and discounts it to today at a rate that reflects the risk of receiving it.
- Discount rate
- The yearly return a buyer requires for the risk of owning the business. A higher rate lowers what future cash is worth today.
- Comparable companies
- A method that values a business at the multiples of earnings or revenue at which similar companies are valued.
- Precedent transactions
- A method that values a business at the multiples paid in past sales of similar companies.
As featured in
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Last reviewed September 26, 2026 against VA's valuation models.