Building Inspection Valuation: EV/EBITDA & EV/Revenue

For the owner of a building control, home inspection or construction inspection firm, the business is often the work of a career and its sale the largest financial decision they will make. What the business fetches depends on how many credible buyers compete for it, and 62 different buyers have bought building and construction inspection companies since 2015. The sections that follow cover what building inspection deals have been valued at, what buyers pay more for and who is consolidating the sector.

In our database, about 94% of the roughly 2,700 building and property inspection companies are independent and privately owned, and private equity-backed platforms and large TIC groups have been buying them, so a well-run firm can draw several buyers into a process. We count 153 acquisitions of building and construction inspection companies since 2015, 75% of them by private equity firms or their platforms, and 103 of the 153 were made in 2021 or later.

Below we bring together the valuation data that is public and compare it with inspection as a whole and the wider TIC sector, then set out what drives the value of a building inspection business and who is buying.

In short, the building inspection deals with a calculable revenue multiple have a median of about 1.6x revenue, in line with inspection as a whole and below the 1.8x median for all TIC deals. Three deals disclose EBITDA, below the five we need to show a median, so the EBITDA reference is the 9.5x median for inspection as a whole. That figure comes from much larger deals, and the median building inspection deal was about $5.7M.

Building Inspection Deal Multiples Compared With the Wider TIC Market

Of the 153 building and construction inspection deals in our database since 2015, 8 disclose a deal value. Adding acquirer announcements and company filings, we could calculate an EV/Revenue multiple for 5 transactions and an EV/EBITDA multiple for 3. Three is below our five-deal minimum, so the segment EBITDA cell reads n/a and the comparison rests on the revenue multiple and deal size.

The 9.5x EBITDA median for inspection as a whole comes from 25 deals with a median deal size of about $120M, many times the $5.7M median here. Only two of the 114 private equity deals in this segment disclosed a value. Where your own firm sits against these figures turns on its size, the share of revenue under multi-year contracts or frameworks, the number of licensed people who can sign off work and its claims record. Most owners should expect a multiple below the 9.5x unless several buyers compete for the firm and it can show multi-year contracts, licensed people who can sign off without the owner and a clean claims record.

We track every building and construction inspection acquisition since 2015, 153 deals by 62 different buyers, so we know which buyers fit a firm like yours and what they have paid.

What Drives a Building Inspection Valuation

A buyer tests each point below, and each one moves the value up or down the range. The evidence takes months to build, so start well before a sale.

Licensed and registered people. The right to approve plans and sign off building work sits with licensed or registered people and firms: registered building inspectors and building control approvers in England and Wales, ICC-certified inspectors and state-licensed home inspectors in the US, registered building surveyors in Australia and certified diagnosticians in France. Buyers count licensed people at each grade and how many can sign off work if the owner steps back. Keep a register of each person’s license or registration, its grade, its renewal date and the work it allows them to sign off.

Contracts and how revenue renews. A firm that runs plan review and inspection for towns and counties under multi-year contracts, or holds framework agreements with housebuilders, developers and housing associations, has revenue that renews. Per-job work that has to be won again each time is valued lower, unless it comes through steady referral channels. Show the length of each contract, when it is due for renewal and how often it has been renewed before.

Exposure to the housing and construction cycle. Home inspection follows housing transactions, and building control and site inspection follow construction starts. Both are cyclical, so buyers look at earnings over several years. Revenue tied to existing buildings, such as periodic inspections, energy certificates and condition surveys, continues when new building slows, and buyers look for it.

Liability record and insurance. An inspector signs off work whose defects may only show years later, so buyers check the claims history and professional indemnity cover closely. Open claims, or difficulty obtaining cover, reduce the number of buyers. Put together a schedule of every claim and notification, open or closed, with your current policy limits and the terms on which cover continues after a change of ownership.

Referral channels and booking volume. For a home inspection firm, value sits in relationships with real estate agents, inspector capacity, booking volumes and revenue per inspection, including add-on services such as radon, mold and sewer line tests. Platforms buying these firms look for local market share and a booking process they can bring onto their own systems. Show monthly bookings and revenue per inspection, and the share of jobs that comes from your top referring agents.

Regulatory change. New rules create work and raise the bar to enter. In England, the Building Safety Act 2022 required approved inspectors to register with the Building Safety Regulator as building control approvers from April 2024, and individual inspectors to register. In the Netherlands, the Wkb introduced private quality assurers for simpler building work from January 2024. Buyers check that a firm and its people meet the current rules.

How we present these to buyers. A buyer pays for what it can see and check. Part of our work in a sale is to present the business as strongly as the facts allow: we show the licensed and registered people, how the contracts renew, and the referral channels behind the booking volume, and we deal with weak points before a buyer finds them and uses them to lower the offer, and the valuation assessment above is the place to start, a year or two before a sale.

Who Is Buying Building Inspection Companies

We count 153 acquisitions of building and construction inspection companies since January 2015, by 62 different buyers. Private equity firms and their platforms made 75% of them: 60% of the 50 deals in 2015 to 2020 and 82% of the 103 deals since 2021. Targets were in 18 countries: 73 in North America, 33 in the UK and Ireland, 28 in continental Europe, 10 in Australia and New Zealand, 8 in Asia and 1 in La Réunion.

The mix differs by country with the rules. US home buyers routinely commission an inspection, and many towns and counties outsource plan review and inspection to private firms. In England and Wales, private registered building control approvers work alongside local authorities. French sellers and landlords must provide mandatory property diagnostics, and in several Australian states private building surveyors approve building work.

The five most frequent buyers made 70 of the 153 deals. The table shows each buyer’s building inspection deals and its other TIC acquisitions since 2015, which add up to its total.

The buyer who calls will depend on what your firm does. LaunchPad Home Group buys home inspection firms and SAFEbuilt buys building control firms, while Bureau Veritas, SOCOTEC and Phenna Group buy across the segment and well beyond it. A specialist platform and a diversified group want different things from the owner after the sale; see strategic vs financial buyers.

One buyer’s offer tells you what that buyer would like to pay. Offers from several buyers, made at the same time on the same information, tell you what the business is worth. That is what a sale process does, and it is the work we do for owners: talk to us before you reply to an approach.

Selling a Building Inspection Company: What a Run Process Changes

An approach usually comes on the buyer’s timetable, on the buyer’s terms and with no rival offer to compare it against, so an owner who answers it alone is negotiating with one party. A competitive sale process changes that in four ways, and running it is what we do for owners.

Several buyers bid at the same time. Private equity firms and their platforms made 82% of the 103 deals since 2021, and 62 different buyers have bought building and construction inspection companies since 2015. A platform that buys only in your niche, such as LaunchPad Home Group in home inspection or SAFEbuilt in building control, and a TIC group such as Bureau Veritas or SOCOTEC value the same firm differently, and offers that arrive in the same week, on the same information, show what the market will pay.

The process sets the terms of engagement. The timetable, the information each buyer sees and the date offers are due are set for the seller, so competition decides the value instead of the first buyer’s opening figure.

Every term is negotiated while alternatives exist. Cash at completion, any earn-out and how it is measured, and how long you and your licensed inspectors must stay all change what the sale is worth to you. Where sign-off rights sit with named individuals, the buyer will want those people tied in, and the terms it offers them move most while a second buyer is still in the process.

The business is ready before the first call. The license or registration of every inspector and approver, and the firm’s own registration where one applies, such as with the Building Safety Regulator in England or as a private quality assurer under the Wkb in the Netherlands. Also your contracts, with renewal dates and change-of-control clauses, your claims history and cover, and, for home inspection, bookings by referring agent. Buyers discount what they cannot check, so we prepare this with you before any buyer is contacted.

Why Building Inspection Owners Work With Us

We advise owners on sales with typical enterprise values between $5M and $100M, as partners of the Globalscope network. We also advise serial acquirers, which is how we know the way their offers are built and where they leave room.

Recent transactions

• Advice to Apave on its acquisitions of ISOCERT and De Duurzame Adviseurs.
• Sale of CKSource, the rich-text editor developer, to PSG via Tiugo Technologies, after a global process that drew several letters of intent.
• Advice to Visma on its acquisition of SaldeoSMART.

“We were impressed with Marcin’s negotiating skills and Aventis’ ability to make things happen.”

Sindre Talleraas Holen, M&A Director, Visma

“Aventis Advisors did the heavy lifting so that our management team could stay focused on our business.”

Wiktor Walc, President, CKSource

Talk to Us

If you own a building control, home inspection or construction inspection business, talk to us before you reply to an approach, agree a price or sign a letter of intent. We run competitive sale processes for owners: we prepare the business for buyers, approach the TIC groups and private equity platforms most likely to pay for your licensed staff, contracts with authorities and developers, referral channels and claims record, bring their offers to a single deadline and negotiate the terms through to closing. Write to us at marcin.majewski@aventis-advisors.com. The first conversation is confidential. For more on how we work, see our M&A advisory for TIC companies.

Methodology

The figures cover majority acquisitions of companies whose main business is building control and code compliance (including plan review and outsourced building departments), home inspection and property diagnostics, or construction quality inspection, worldwide, since January 2015. Construction materials testing and special inspection firms are covered on their own page; laboratories, geotechnical firms, fire safety engineering firms, asbestos-only surveyors, software and training providers are excluded.

The deals come from the Aventis Advisors TIC deal database, which combines Mergermarket with acquirer announcements and our own research. EV/EBITDA and EV/Revenue use enterprise value (EV), which is equity value plus net debt; EBITDA is earnings before interest, tax, depreciation and amortization. Median deal size uses EV where disclosed, otherwise the disclosed deal value, which is the consideration for the stake acquired; stakes of 51% to 99% count only where an EV is stated. Distressed sales, and multiples outside 1x to 60x EBITDA or 0.05x to 20x revenue, are excluded from the multiples. Most private deals close at undisclosed values, so the deals with a published figure are a small sample. Medians are shown where at least five deals disclose the figure, and ranges where at least ten do. EV/EBITDA is shown where the multiple or the EBITDA was published by the buyer, the seller, filings or a reputable data source; EBITDA derived from a stated margin is excluded. Each deal is counted under the buyer’s group at the time of the deal, and private equity buyers are private equity firms and the companies they owned then. All TIC combines the inspection, testing laboratory and certification deals on our pages, 2,841 since 2015.

Where the consideration includes an earn-out, the maximum is used. Company counts come from our separate database of TIC companies.