A different kind of sale
Trades and services businesses make up a meaningful share of NZ SME transactions. They share a recognisable pattern: an owner-operator who started on the tools, a strong local reputation, a team of technicians or contractors, a fleet of vans, and an order book of recurring or referral work.
They also share a recognisable set of value challenges: heavy owner-dependency, key-person licensing, lumpy work-in-progress, and tax structures that have grown rather than been designed. The buyers for these businesses know all of this, and the ones with cash know exactly what they will pay for and what they won't.
This article walks through the value drivers that consistently move sale price in NZ trades and services businesses — and the work you can do in the year before sale to address each one.
1. Recurring revenue beats project revenue
A plumbing business with $400k of annual maintenance contracts and $600k of one-off project work sells differently from one with $1m of pure project work, even at the same EBITDA.
Buyers and bankers value recurring revenue at higher multiples because it is more predictable, easier to underwrite for finance, and harder to lose with the owner walking out the door.
Sources of recurring or near-recurring revenue in trades and services:
- Maintenance contracts (commercial property, body corporates, councils, retirement villages).
- Compliance work tied to regulations (annual electrical, gas, backflow, fire).
- Servicing of installed equipment under warranty or service plans.
- Repeating residential customer relationships managed via reminder systems.
If you have recurring work, present it cleanly: contract list (anonymised), churn rate, average tenure, gross margin by segment. If you don't, the twelve months before sale is the time to formalise informal repeat work into something buyers can see.
2. The customer book is an asset — if you treat it as one
Many trades businesses live in their owner's head and their tradies' phones. The customer book — a clean, searchable, segmented database of customers with history, preferences and contact details — is one of the most undervalued assets in the sector.
Steps that pay back at sale:
- Move from paper job sheets to a proper job management system (Tradify, ServiceM8, AroFlo, simPRO — pick one and stay with it).
- Build a single source of truth for customer contact details, addresses, and history.
- Tag customers by segment (residential / commercial, repeat / one-off, premium / price-sensitive).
- Track customer acquisition source so a buyer can see where new work comes from.
A buyer who can see the database is a buyer who can underwrite future revenue. A buyer who has to trust the owner's word is a buyer who discounts heavily.
3. Key-person risk and licensing
Trades and services businesses live and die on licensed practitioners. If you are personally the only licensed electrician, plumber, gasfitter, builder, electrical inspector or registered drainlayer in the business, the business is one resignation (yours) away from being unable to operate.
What buyers want to see:
- A nominated supervisor or licensed practitioner who is not the owner.
- Documented training pathways for apprentices who are progressing toward licensing.
- Renewals of all relevant practising certificates, compliance and insurance current.
- Site safety systems (a real WorkSafe-compliant H&S regime, not a binder on a shelf).
If you are the only licence holder and you want to maximise sale value, the single highest-return investment in your last twelve months is hiring or developing a second licensed practitioner with the authority and intent to stay through the transition.
4. Pricing discipline
Owner-operators often quote on instinct after twenty years of experience. That instinct rarely transfers cleanly. Buyers want to see:
- Standardised pricing for common jobs (hourly rates, callout fees, common installation types).
- A documented quoting process for larger jobs (mark-up policy on materials, contingency policy, sign-off authority).
- Gross margin tracked by job type, not just at the business level.
Without this, the buyer's first question after settlement is "how do I quote a job?" and the first answer they get from staff is "the boss does that". That is a value-destroyer.
5. Work in progress and the cash trap
Trades and services businesses often carry significant work-in-progress (WIP): jobs started but not yet invoiced, retentions held by head contractors, deposits paid to suppliers for materials not yet installed.
Buyers care about WIP for two reasons:
- It affects the working capital adjustment at settlement (the buyer is funding it after settlement until it converts to cash).
- It is often a source of disputes if not clearly documented.
Tighten WIP discipline:
- Invoice progress payments where contracts allow.
- Reconcile WIP monthly with a clear job-by-job schedule.
- Document retentions held by head contractors, with expected release dates.
This work pays back in the working capital negotiation alone (see our companion article on working capital pegs).
6. The fleet, tooling and premises
Vans, utes, trailers and tools are tangible value but also a depreciation-recovery trap (covered in our tax article). Some practical points:
- Get the fleet listed with year, make, model, kilometres, ownership/lease status, current value.
- Cull tooling that is obsolete or surplus before going to market — don't leave it for the buyer to write down.
- If you operate from leased premises, the lease assignment piece is critical (see our lease article).
- If you operate from premises you own, decide whether they are being sold with the business, leased to the buyer, or kept and sold separately.
7. Compliance and risk
Trades and services businesses operate under a meaningful compliance load: WorkSafe, building consents, electrical safety, gas safety, drinking water, building practitioner licensing. A buyer with any commercial sense will check:
- Outstanding regulatory notices or warnings.
- Recent ACC claims and their cost impact.
- Open warranty claims and remediation work.
- Open or recent disputes with customers, suppliers, or staff.
The vendor who arrives with a clean, organised file on each of these accelerates DD and signals that the business has been run properly. The vendor who hasn't thought about it telegraphs risk.
What this means for you
If you operate a NZ trades or services business and are within twelve to eighteen months of sale:
- Move to a real job management system if you haven't already, and get twelve months of clean data in it before going to market.
- Develop or hire a second licensed practitioner who is not you.
- Document standard pricing and quoting.
- Tighten WIP discipline and reconcile monthly.
- Compile a compliance file that you would be proud to hand to a stranger.
The compounding effect of these moves is often a multiple uplift — sometimes the difference between a business that struggles to sell at all and one that runs a competitive sale process.
General information only — every trades business has sector-specific compliance and tax nuances; get advice from your accountant and an industry-experienced broker before going to market.