Executive Summary
This document presents a high-level overview and valuation framework for a niche weatherstripping service business. The purpose of this summary is to explain how earnings have been evaluated, how normalization has been applied, and how the remainder of this document is structured.
The valuation is based on Seller’s Discretionary Earnings using a working-owner model. The business is currently operated by three working owners with no salaries. To reflect a realistic post-transaction structure, two of the three owner roles have been normalized to market-rate labor, while one role is assumed to be filled by the buyer. This produces a normalized discretionary earnings figure that represents cash flow available to a working owner after required labor costs.
The analysis focuses primarily on the most recent year, which reflects current operations and confirmed scheduled work. Historical results are provided for context and to illustrate consistency and seasonality, but the valuation methodology is anchored to the most current normalized earnings.
The sections that follow provide an overview of the business model, customer base, financial performance, earnings normalization methodology, and year-over-year normalized earnings. The document concludes with a summary of the valuation approach and supporting rationale.
Business Overview
This company provides specialized weatherstripping services focused on residential high-rise buildings. Work consists of refurbishing windows and patio doors to restore original performance or better, improving energy efficiency, reducing drafts, and minimizing noise for residents. Services typically deliver savings of 80% to 90% compared to full window replacement. The business operates with minimal cost of goods sold, and expenses are primarily related to labor, travel, and job supplies. Customer acquisition requires little time or expense, with work generated almost entirely through repeat demand within a defined niche.
Customer Base
The company serves a very niche client base within the residential high-rise market. Long-standing relationships with property developers generate consistent project flow during the active season, with multiple open work orders currently scheduled. The incoming owner will be introduced to these relationships and assume responsibility for completing the scheduled work.
Financial Performance Overview
The business has been consistently profitable, though results vary by year due to project timing and seasonality. To present a realistic view of transferable earnings, financial results have been normalized to reflect a working-owner operating structure.
Earnings Normalization Explanation
The company is currently operated by three working owners, none of whom draw a salary. In order to present normalized earnings that reflect how a buyer would realistically operate the business, two of the three owner roles have been replaced with market-rate labor. The remaining role is assumed to be filled by the buyer as a working owner.
A total annual replacement cost of $99,000 has been applied to reflect the cost of replacing two owner roles. This adjustment is treated as an operating expense and reduces reported earnings accordingly. Interest expense has been added back as a financing-related item. This approach produces a normalized discretionary earnings figure that represents cash flow available to a working owner after paying for two required labor roles.
Normalized Discretionary Earnings by Year
The table below summarizes normalized discretionary earnings on a year-over-year basis. Figures reflect the replacement of two working owner roles at market rates, with the remaining role assumed to be filled by a working owner-operator. Interest expense has been added back where applicable.
| Year | Net Income | Replacement Labor Adjustment | Interest Add Back | Normalized SDE |
| 2023 | $311,331 | ($99,000) | $293 | $212,624 |
| 2024 | $543,076 | ($99,000) | $343 | $444,418 |
| 2025 | $228,074 | ($99,000) | $1,938 | $131,012 |
| 2026 | $274,739 | ($99,000) | $0 | $175,739 |
Valuation Methodology
The valuation is based primarily on the 2026 normalized discretionary earnings figure, as this year reflects current operations and confirmed scheduled work. A multiple-based approach has been applied to normalized discretionary earnings assuming a working-owner model, which is standard for owner-operated service businesses of this size and structure.
Using the 2026 normalized discretionary earnings of $175,739, the following valuation outcomes are derived across a range of commonly observed market multiples:
| Multiple | Implied Value |
| 1.8× | $316,330 |
| 2.0× | $351,478 |
| 2.3× | $404,200 |
| 2.5× | $439,348 |
Based on this analysis, a 2.0× normalized discretionary earnings multiple has been selected. This multiple implies a value of approximately $351,000 and reflects a practical view of the business’s current earning capacity under a working-owner structure. It balances demonstrated profitability with the hands-on nature of operations and provides a reasonable valuation reference grounded in current performance rather than past variability.
Conclusion
This business offers a buyer strong normalized cash flow, minimal overhead, and well-established niche client relationships. The normalization approach appropriately reflects the cost of replacing two owner roles while preserving the working-owner model. Using 2026 normalized discretionary earnings as the valuation base provides a clear and supportable foundation for determining fair market value.
