Start with adjusted EBITDA in the usual way, adding back owner compensation above market, family payroll, personal vehicle use and one-time costs. Then expect every serious buyer to ask one question first: what percentage of your revenue is under recurring agreements? A business at eighty percent recurring is forecastable, and a multiple is fundamentally a price paid for forecastable earnings. A business built on one-off treatments and callbacks has to win its revenue again every year, and is valued closer to a general trades business. Two companies with identical profit can sit several turns apart on this factor alone, which is why it is worth measuring and documenting properly long before you go to market.
Not all recurring revenue is equal. Route density, meaning how many accounts a technician can service within a small geography, drives the margin a buyer will actually earn, and a dense suburban book is worth considerably more than the same revenue scattered across a wide area. Churn is the other half: an annual cancellation rate in the single digits signals a durable book, while high churn tells a buyer that the revenue they are paying a multiple for will erode. Buyers will want the underlying data, so account-level records showing tenure, renewal rates and revenue per account do more for your price than any narrative about the business.
Beyond the core route book, buyers look carefully at anything that creates a future obligation or a transfer risk. Termite warranties and renewal commitments are liabilities as well as revenue, and buyers want to see how they are reserved and what the historical claim experience has been. Commercial contracts, especially in food service, healthcare and property management, are valued well but are examined for whether they are genuinely contracted and assignable rather than relationship-based with you. Licensing, applicator certifications and state registrations all have to transfer cleanly. Where these are in order, a strong pest control business sits at the top of its range; where they are not, the gap comes out of the price during diligence.
Because a large share of the revenue is contracted and repeats without being re-sold each year. A multiple is a price paid for predictable future earnings, and a route book of recurring agreements is about as predictable as small-business revenue gets. That predictability, combined with strong demand from acquirers who can add your routes to existing ones and remove duplicated overhead, is what lifts pest control above trades that depend on winning each job individually.
Substantially, because churn directly reduces the durability of the revenue the multiple is paying for. Buyers model your book forward using your actual cancellation rate, so a business with low single-digit annual churn is underwritten close to face value while a high-churn book is discounted before a multiple is even applied. Being able to show account-level tenure and renewal data over several years is one of the most effective ways to defend the top of your range.