10d • General discussion
Build A business You Can Sell
The three valuation methods and when they apply
EBITDA multiple is the standard for any business a buyer expects to operate without the seller. The multiple itself is the market's opinion on risk — a business that collapses when the owner leaves is high risk, and 2–3× reflects that. A business with real management depth, recurring contracts, and documented systems is low risk, and 5–8× reflects that. In practice, most small crane companies never get to prove the higher number because they never build the infrastructure to support it.
Asset-based plus a premium is the floor. Fair market value of the fleet, plus something for customer relationships, standing programs, trained operators, and safety records. This is effectively what happens when the EBITDA path doesn't work — you get your cranes back, plus a small goodwill kicker if the buyer sees value in the book. Many owners end up here anyway.
Seller's Discretionary Earnings (SDE) multiples are used for very small operations where the owner's salary is a meaningful chunk of the profit. You add the salary back to get a truer picture of cash flow, then apply 2–3×. Useful for single-operator or two-crane shops.
The harsh reality of the owner-dependent business
Most crane companies in the small segment run this way — the owner is the salesperson, the scheduler, the estimator, the guy clients call at 6am, and the one who knows every operator's strengths and weaknesses. When that person walks out the door, the business genuinely doesn't exist in the same form. Buyers understand this immediately. The ones who would buy it are other crane operators who want to absorb the fleet and maybe a few customers — and they're not going to pay a meaningful premium over what those cranes are worth on their own.
So the honest math is: if your EBITDA is $400K, a 3× multiple gets you $1.2M. If your crane fleet is worth $900K on its own, you took a lot of risk and stress for a $300K premium. Many owners figure this out late and just liquidate privately — which often nets a similar or better outcome with less hassle.
What investors actually buy
PE firms, family offices, and crane industry roll-ups (and there are several active ones in Canada and the US right now) are not buying expertise. They are buying a cash flow machine they can install management into and scale. The due diligence question isn't "does this owner know cranes" — it's "does this business run without the owner for 90 days." If the answer is no, the deal dies. They will put a CEO in place, often someone with heavy equipment or logistics background, and they expect the systems and the team to carry the business. The former owner may stay on for a transition period, but the whole premise of the deal is that they're gone eventually.
No investor will deploy capital into a business where the key man risk is that severe. It's the fastest way to lose the investment.
The practical gap between 3× and 5–8×
On $1M of EBITDA, the difference between 3× and 6× is $3M in your pocket. That gap is large enough that it's worth spending 3–5 years intentionally building toward the higher number before an exit — hiring an operations manager, getting off the tools, systematizing dispatch and safety, building contract revenue instead of just spot work, cleaning up the financials. The crane industry is full of owners who know the business deeply but have never been told clearly that the structure of their business, not just the revenue, determines what it's worth.
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