$5 million for a $750K EBITDA HVAC company. Here's how PE makes the math work.

A data point worth working through: $5 million for a ~$750K EBITDA residential HVAC company, all cash at close. That's roughly 6.7× EBITDA — a strong result for an independent at that size. Here's how a private equity-backed acquirer makes that same price work in its own favor.

$750K is an independent's number — not the platform's.

That $750K of EBITDA reflects what the business produces at its volume, buying at its scale. A platform doesn't inherit that ceiling. The moment the same company is folded onto an operating base with dozens of brands across a region or the country, its cost structure changes — because the platform buys everything cheaper.

Where the synergies come from.

A platform spends millions a year with the very vendors this independent uses one job at a time — field software like ServiceTitan, equipment manufacturers, materials and parts suppliers. That negotiated pricing flows to every newly acquired location on day one. Two buckets tend to show up fastest:

• OpEx synergies (~$150K): consolidated back office, software, insurance, marketing, and overhead.
• Equipment & materials synergies (~$250K): better pricing on units, parts, and supplies across the board.

The pro forma bridge.

• $750K acquired EBITDA
• + $150K OpEx synergies
• + $250K equipment & materials synergies
• = $1.15M pro forma EBITDA

Two multiples, one purchase price.

The $5 million is fixed. Against the seller's standalone $750K, that's about 6.7× — the number the seller actually realizes, and a genuinely good one. Against $1.15M of pro forma EBITDA, the same $5 million is about 4.3× — the number the buyer underwrites to, before a single dollar of growth. That spread, from 6.7× down to 4.3×, is created entirely by synergies that exist because of the platform, not the target.

For sellers, the lesson isn't that the buyer is overpaying. It's the opposite: your business is worth more inside a platform than it is standalone. The real question is how much of that synergy value you can negotiate into your price and your deal structure — because the buyer has already priced it into theirs.