What's the multiple difference between an add-on and a platform?

What is the difference between an add-on and a platform?

A platform is the company a buyer builds around. It has a management team, systems that can absorb other companies, and reporting a lender or auditor can rely on. In private equity, it is usually the firm's first acquisition in an industry.

An add-on is a company bought and folded into a platform. It often has one owner who does most of the selling, scheduling and estimating. The buyer plans to replace that work with the platform's people and systems.

The same business can be either. What decides it is whether the company can run and grow without its owner, and whether it can take on other companies.

What do the multiples actually look like?

Here is the ladder from the sources on this page. Note the change from SDE to EBITDA as companies grow.

• Main Street HVAC (BizBuySell): 2.79x SDE average. SDE includes one owner's salary and benefits.
• Owner-run HVAC shops (practitioner estimates): 2.0–3.5x SDE.
• $1–10M enterprise value, all industries (GF Data 2024 median): 4.5x EBITDA.
• HVAC companies with $3–10M of revenue (practitioner estimates): 5–8x EBITDA.
• $10–100M enterprise value (GF Data): 6.5x EBITDA.
• Deals with $5–50M of EBITDA, all industries (IBBA, Q2 2026): averaged 5.8x.
• HVAC regional platforms over $25M of revenue (practitioner estimates): 9–13x EBITDA.
• $100–500M enterprise value (GF Data): 9.0x EBITDA.

Above roughly $1M of earnings, buyers switch from SDE to EBITDA and treat the owner's salary as a cost. An SDE multiple and an EBITDA multiple are not directly comparable.

Why do buyers pay a platform premium?

• Lower risk. The earnings do not walk out the door with the owner.
• Better information. Monthly closes and clean books let a buyer trust the numbers.
• Growth capacity. A platform can buy add-ons. Its buyer is paying for that future pipeline too.
• More bidders. Larger companies can be bought by private equity and financed by more lenders.

An add-on rarely captures these. The savings from combining it with a platform usually belong to the buyer who does the combining.

How common are add-ons compared with platforms?

Much more common. PKF O'Connor Davies tracked 25 HVAC deals in the first half of 2026: 14 were private equity add-ons and 3 were private equity platforms. Carta data from September 2026 shows private equity home-services add-ons are roughly four times as common as platform deals in HVAC. Private equity home-services deal count rose 150% from 2020 to 2024.

Two things follow. If you own a small HVAC company, the most likely private equity buyer will treat you as an add-on. If you are building a platform, you will often bid against private equity add-on buyers for the same shops.

Worked example: the same shop, two owners

Assume an owner-run HVAC shop earns $600,000 of SDE. The $120,000 manager salary and the 9x platform multiple are assumptions within the ranges above.

1. Sold as an add-on at the BizBuySell HVAC average of 2.79x SDE: $600,000 × 2.79 = $1.674M.
2. Inside the platform, the owner is replaced by a $120,000 manager. EBITDA: $480,000.
3. Valued as part of a regional platform at 9x: $480,000 × 9 = $4.32M.
4. Gap: $4.32M − $1.674M = about $2.65M. That value goes to the platform's owners, before integration costs.

The gap is not free money. The platform must actually integrate the shop, keep its technicians and customers, and stay large and well run enough to earn 9x. If it doesn't, the shop is worth roughly what was paid.

If you own a business: platform or add-on?

Ask three questions. Could the business run for a month without you? Do you close the books monthly and on time? Could it take on another company's customers and staff next quarter? Three yes answers point toward platform. One or none points toward add-on, at least for now. See is my first business a platform, or just a business?

Where these numbers come from: HVAC practitioner estimates from Beancount; BizBuySell SDE multiples and the SDE-to-EBITDA switch via Beancount; GF Data 2024 medians via Carry and Conquer; IBBA Market Pulse Q2 2026; PKF O'Connor Davies HVAC M&A update, Summer 2026; Carta, September 2026.

Related questions

Do I get a platform multiple automatically once I reach a certain size?

No. Size thresholds in the data are medians, not rules. A large company that still depends on its owner, or has messy books, will be priced like a collection of add-ons.

Why would a private equity add-on buyer pay more than an individual buyer?

The add-on buyer expects savings from combining the shop with its platform, and often has cheaper capital. It can pay above Main Street prices and still buy well below its own platform multiple.

Should I sell to a private equity platform as an add-on?

It depends on whether you want cash now or a larger outcome later with more risk. See should you sell to a private equity platform or build your own?

How is a holding company with several platforms valued?

Either as the sum of its parts or on consolidated earnings with a premium for the whole. See how do you value a holding company?

What comes next

Multiples and buyer competition differ by industry, and so does the case for a roll-up. Next, read which industries work for small business roll-ups?

Related articles

• What is multiple arbitrage and how do roll-ups create value?
• Which industries work for small business roll-ups?
• Should you sell to a private equity platform or build your own?
• Why do roll-ups fail?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.