What is EBITDA, and why does it matter so much when building, financing, or selling a home service business?

John Wilson and Jack Carr break down EBITDA in simple terms, including how it differs from net income and SDE, what a healthy EBITDA margin looks like, and why buyers, banks, and lenders pay so much attention to it.

They also explain how EBITDA impacts business valuation, why maximizing profit doesn't always maximize company value, and the other financial metrics buyers look at during an acquisition.

Plus, John shares the 50/30/20 framework used at Wilson: 50% gross margin, 30% SG&A, and 20% EBITDA.

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In This Episode
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• What EBITDA means and why it matters
• EBITDA vs. net income and SDE
• Healthy EBITDA margins for home service businesses
• How EBITDA impacts business valuation
• Using strong financials to access capital
• Why higher EBITDA doesn't always mean a better business
• The 50/30/20 framework

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Sponsors
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Connect
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John Wilson
https://www.linkedin.com/in/johnbwilson1/

Jack Carr
https://x.com/thehvacjack

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John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC

📌 Disclaimer: Some links may include UTM parameters or affiliate relationships, meaning we may earn a commission if you make a purchase. Episodes may feature sponsors, but all opinions expressed are our own.

What Is EBITDA? How to Value, Grow & Sell Your Home Service Business

Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

What Is EBITDA? How to Value, Grow & Sell Your Home Service Business