EBITDA FOR CONSTRUCTION COMPANIES.
EBITDA is the figure a bank uses when it sizes debt service coverage and the figure a buyer starts from when they value your business. Most construction subcontractors have heard the term and don't track it monthly, so they walk into financing and transaction conversations without knowing their own number. It's calculated by starting at net profit and adding back interest, taxes, depreciation, and amortization, which for an equipment-heavy contractor produces a figure well above net profit.
The distance between your net profit and your EBITDA tells you something worth knowing on its own. A civil or excavation contractor carrying heavy depreciation will see a wide spread, because the depreciation is a real cost that already happened when the machine was bought and isn't cash leaving this year. A drywall or framing contractor will see almost no spread. Which add-back is doing the work in your calculation says more about how your business is built than the total does.
WHAT IT MEANS.
EBITDA is earnings before interest, taxes, depreciation, and amortization, a measure of operating earnings taken before financing decisions, tax strategy, and non-cash accounting entries.
Business value in construction is most commonly expressed as a multiple of EBITDA, typically 2 to 5 times for commercial subcontractors in the $1M to $12M range. If you don't know your EBITDA you don't know your business value, and without that you can't make an informed decision about growth, partnership, or exit. The multiple itself depends on revenue stability, customer concentration, systems quality, owner dependence, and growth trajectory.
WHY THE NUMBER GOES UNTRACKED.
You don't know what the business is worth
Business value in construction is most commonly expressed as a multiple of EBITDA, typically 2 to 5 times for commercial subcontractors in the $1M to $12M range. If you don't know your EBITDA, you don't know your business value. Without a business value, decisions about growth, taking on a partner, or planning an exit get made on feel rather than on arithmetic.
EBITDA looks better than net profit and you aren't sure why
EBITDA adds interest, taxes, depreciation, and amortization back to net profit, which is why it's always the larger figure. For equipment-heavy contractors, depreciation alone can be significant, so EBITDA runs meaningfully above net profit. Working out which add-back is driving that difference tells you something useful about how much cash the business really generates.
Your banker or your buyer is using it and you aren't
When a bank evaluates debt service coverage for a loan, EBITDA is often the numerator they use. When a buyer evaluates your business, an EBITDA multiple is where they start. Not tracking it monthly means walking into both of those conversations without knowing the number the other side has already calculated.
WHAT IT LOOKS LIKE IN DOLLARS.
Start with net profit, then add back interest expense on all debt, income tax expense, depreciation on equipment and other fixed assets, and amortization of any intangible assets. For a $5M contractor with 6 percent net profit, which is $300K, plus $80K in depreciation, $40K in interest, and $60K in taxes, EBITDA is approximately $480K. That's a $180K difference between what the P&L reports and what a lender or a buyer works from.
Commercial subcontractors in the $1M to $12M range typically trade at 2 to 5 times EBITDA in arm's length transactions. A well documented, systems-driven business with diversified GC relationships and clean financials commands the upper end of that. An owner-dependent business with messy books commands the lower end, or doesn't sell at all.
HOW THE NUMBER GETS BUILT.
Start with net profit and add back four things: interest expense on all debt, income tax expense, depreciation on equipment and other fixed assets, and amortization of any intangible assets. The result is operating earnings measured before financing decisions, tax strategy, and non-cash entries. For a $5M contractor at 6 percent net profit with $300K net, $80K in depreciation, $40K in interest, and $60K in taxes, EBITDA comes out around $480K.
The 2 to 5 times range is wide because the multiple is decided by revenue stability, customer concentration, systems and documentation quality, owner dependence, and growth trajectory. A business with clean financials, several GC relationships, and documented systems earns the top of the range. The same EBITDA in an owner-dependent business with messy books earns the bottom of it, which is the clearest argument there's for building the financial structure years before you need it.
EBITDA gets calculated and reported every month alongside net profit, gross margin, and overhead rate. Monthly tracking keeps the business value conversation current instead of turning it into an annual calculation off the tax return. When a financing conversation or a transaction comes up, the EBITDA history is already clean, current, and available.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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