Selling in 2027? What a buyer will find in your 2026 numbers, and how to find it first. Live session, January 20. Owner session, January 20.Reserve your seat
Capital Row
Services

Priced as services. Size moves your number more than the label does.

Services businesses are bought on earnings, and the multiple rises with size. One survey puts services within a turn of information technology at the same size. A transaction database puts them more than ten turns apart. We do not know which is right, and we will not pick one silently.

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Services businesses in scope Earnings traced to source Before the LOI
What size does
6.2x

earnings is the median for business services companies with $1M to $4.99M of earnings. With $10M to $24.99M of earnings it is 7.5 times.

Pepperdine Graziadio Business School, 2026 Private Capital Markets Report (Spring 2026), Table 31, page 66: investment banker survey, 43 respondents, deployed January 2026, transactions closed in the prior twelve months. Median multiples of earnings before interest, tax, depreciation and amortization, by the company’s own earnings, not deal size.

Two readings of the same question

How far below software is a services business priced? The published answers disagree.

Both readings are shown. Your own number depends on size, on contracts and on what the earnings are once they are traced to source.

7.0x
Information technology, same $1M to $4.99M earnings band, same surveyAgainst 6.2 times for business services. Less than a turn apart.
6.7x
Services deals under $5M, from a transaction databaseAgainst 17.2 times for software deals of the same size. More than ten turns apart.
5.9x
Average multiple at $10M to $25M of enterprise valueRising to 6.6, 8.7 and 10.0 times in the three bands above it, up to $250M.

Pepperdine Graziadio Business School, 2026 Private Capital Markets Report (Spring 2026), Table 31. An M&A advisory firm’s analysis of a transaction database, July to August 2026. GF Data, January 27, 2026, nine months of 2025. The survey and the database measure different things and are not reconciled here.

Services · What a buyer reads first

Six lines a buyer recomputes from your own records.

Services businesses are bought on adjusted earnings, and the multiple rises with size. What a buyer reads is how durable the earnings are once the owner steps back.

Recurring against projectWhat repeats, and under what paper

Retainers, managed services and maintenance contracts are read apart from projects. A buyer prices the repeating part on one multiple and the project part on another.

UtilizationBillable hours over paid hours

Labor is the cost of revenue. A buyer rebuilds utilization and realization by person and by month, and reads the trend before the average.

Backlog and pipelineSigned, scheduled, probable

Signed work with a start date is backlog. Everything else is pipeline. A buyer counts only the first and asks how the second converted last year.

ConcentrationCustomers and referral sources

The five largest customers, and where the next ones come from. A services business whose work arrives through one referral source has a concentration a buyer will find.

Work in progressBilled, unbilled, and overbilled

Unbilled work is an asset a buyer discounts. Overbilling is a liability a buyer counts as debt-like. Both come out of the working capital target.

The owner’s hoursWho sells, who delivers, who decides

If the owner sells the work and delivers the hardest of it, the buyer prices the transition: a longer consulting term, an earnout, or a lower number.

Services · How the numbers are read

As owners keep it. As a buyer reads it.

AreaAs most owners keep itAs a buyer reads it
RevenueInvoices sent, by month.Recurring and project revenue apart, each with its own margin, recognized when earned rather than when billed.
LaborPayroll, in one line.Cost of revenue by person and by engagement, with utilization and realization by month and the subcontractor share.
PricingThe rate card.Realized rates against the card, discounts by customer, and the share of fixed-fee work that ran over budget.
CustomersThe top ten, by revenue.Concentration, contract terms, renewal dates, and the referral sources behind the new ones.
Working capitalThe bank balance.Receivables aging, unbilled work, overbillings and payables on a monthly trend; a target set from the trailing twelve months.
The ownerNot on the P&L.Owner compensation normalized to a market salary, and the owner’s own billable hours priced as a cost of replacing them.
Services · What to fix first

Five things worth fixing before a buyer prices them.

In order of what moves the price, from the records the review reads.

  1. Split recurring from project revenueIn the statements, by month, with the contract behind each recurring line. The split is the first thing a buyer asks for and the first thing that moves the multiple.
  2. Put the owner on the payrollAt a market salary, so adjusted earnings are the earnings a buyer will accept rather than the earnings before anyone paid the owner.
  3. Rebuild utilizationBy person and by month from the time records. Decide what the number is before a buyer decides it for you.
  4. Age the receivables and the unbilled workA buyer sets the working capital target from twelve months of history; clean the history first.
  5. Document every adjustmentOwner compensation, personal expenses, one-time costs, each with the document behind it. Undocumented add-backs are removed, not argued.
Services · How it works

Three steps, and you decide what happens after each one.

1A conversation

About the business, its market and your timing.

2The review

Starts with an agreed information request under a signed NDA. Scope is agreed in writing before any work begins.

3The findings

A report and workbook you keep. Act on it, wait, or hand it to your own advisor.

YouYou decide

Sell now, sell later or keep building. Nothing reaches a buyer without your written permission.

Services · Questions

Plain answers, then a conversation if you want one.

Why are the published multiples so far apart?

Because they measure different things. A banker survey reports recast earnings multiples by size band; a transaction database reports what closed. The pages show both and do not reconcile them. Your own number depends on size, contracts and what the earnings are once traced to source.

Does recurring revenue change how a services business is priced?

Yes, where it is contracted and reported apart. A retainer with a term is priced differently from a project that may repeat.

What does a buyer do about my own hours?

Prices them. If you sell the work and deliver the hardest of it, the buyer prices the transition. The review shows how much of the business runs through you, so you can change it before a buyer measures it.

Will the review raise my price?

We will not promise that. It shows what your numbers support and gives you the chance to fix what they do not before a buyer prices it.

Who sees the findings?

You. Nothing reaches a buyer, an advisor or anyone else without your written permission.

What the review covers

A one-time engagement on your own business, using the same evidence standard a buyer will apply.

This is non-attest preparation. It shows you what a buyer’s quality of earnings is likely to find, while there is still time to act on it.

01
Earnings, traced

Revenue reconciled to bank deposits, and reported earnings tied to the records behind them.

02
Every adjustment, marked

Each add-back you or your advisor proposes is marked supported or unsupported, with the document that decides it.

03
Customers and payers

Concentration, retention and contract terms, read the way a buyer will read them.

04
Contracts and licenses

Assignability, change-of-control terms, and the compliance items a buyer’s counsel will ask about.

05
A findings report and workbook

What was found, what it affects, and what to fix first. Yours to keep. See the full review.

Come prepared.

Capital Row is the M&A firm that reads your numbers the way a buyer will, before you go to market. Every figure is traced to a source document, every adjustment is marked supported or unsupported, and the findings are yours to keep.

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Scope is agreed in writing before any work begins. Nothing from your review reaches a buyer, or anyone else, without your written permission.

The other kinds of business