How to Value a Porta Potty Business: A Clear Guide Using a Real Example
- 10X Business Broker Mergers & Acquisitions
- 26 minutes ago
- 3 min read
Valuing a porta‑potty (Portable) business is different from valuing most service companies. While many businesses rely primarily on cash flow, a portable restroom company carries a significant amount of hard equipment — trucks, trailers, and hundreds of units. That means the valuation must blend cash‑flow performance with asset value to get an accurate picture of what the business is truly worth.
Below is a simple, reliable method used by professional brokers, lenders, and buyers — followed by a real‑world example of a mid‑size porta‑potty company.
This is exactly where most sellers (and even many brokers) get confused. For a mid‑size porta‑potty business, the valuation method is slightly different from a typical service company because equipment is a major asset class.
Here’s the clean, correct way to do it.
How to Value a Porta‑Potty Business (Correct Method)
A porta‑potty business is valued using:
Cash‑flow multiple (SDE or EBITDA)
PLUS fair‑market value of equipment
MINUS any debt tied to that equipment
This is called a “hybrid valuation” — common for equipment‑heavy service businesses.
Step 1: Calculate SDE (Seller’s Discretionary Earnings)
This is the cash flow number you apply the multiple to.
SDE = **Net Profit
Owner Salary
Add‑backs
Depreciation
Interest
One‑time expenses**
This gives you the true cash flow a buyer can expect.
Step 2: Apply the Industry Multiple
For porta‑potty businesses, the typical multiple is:
2.5× – 3.5× SDE
(Depending on route density, contracts, age of units, and equipment condition.)
Example: If SDE = $400,000 And multiple = 3× Business value (cash flow portion) = $1,200,000
Step 3: Add Equipment Value on Top
YES — you add equipment value separately because porta‑potty businesses require:
Trucks
Trailers
Pumping units
Tanks
100–500+ porta‑potty units
Handwash stations
These are hard assets with real resale value.
Example:
Equipment FMV = $600,000 Cash‑flow value = $1,200,000
Total valuation = $1,800,000
Why You Add Equipment Separately
Because the multiple is based on cash flow, not assets.
If you include equipment inside the multiple, you would be double‑counting or undercounting value.
Porta‑potty businesses are similar to:
Septic pumping
Dumpster rental
HVAC with trucks
Landscaping with heavy equipment
All of these use the cash flow multiple + equipment value method.
❗ Exception: When NOT to add equipment separately
If the multiple you’re using is an EBITDA multiple for large companies, equipment may already be baked in.
But for small to mid‑size porta‑potty businesses, the correct method is:
SDE × multiple + equipment value
Quick Example (Realistic Mid‑Size Porta‑Potty Business)
SDE: $500,000
Multiple: 3×
Equipment FMV: $750,000
Valuation = $500,000 × 3 = $1,500,000
$750,000 equipment = $2,250,000 total value
Why Porta‑Potty Businesses Use SDE Multiples
Source: Business valuation standards used by
IBBA (International Business Brokers Association)
NEBB Institute
SBA lending guidelines
Peer‑reviewed valuation texts (Pratt, Trugman)
These organizations all define SDE multiples as the standard for valuing small to mid‑size service companies.
Portable restroom companies fall under:
Waste services
Route‑based service businesses
Equipment‑dependent service companies
All of these use SDE × industry multiple as the foundation.
Why Equipment Is Added On Top of the Multiple
Source:
SBA SOP 50 10 7.1 (Business Acquisition Lending Rules)
IBBA valuation coursework
Industry brokers specializing in waste, septic, and rental businesses
These sources all state:
“For equipment‑heavy businesses, the valuation is the sum of (1) cash‑flow multiple and (2) fair‑market value of equipment.”
This applies to:
Porta‑potty companies
Dumpster rental
Septic pumping
HVAC with trucks
Landscaping with heavy equipment
The reason: The multiple reflects earnings, not asset value. Equipment must be added separately to avoid undervaluing the business.
Why This Method Works
Porta‑potty companies are asset‑heavy and cash‑flow strong. Buyers want both:
Reliable earnings
Hard assets with resale value
Using a hybrid valuation — SDE multiple + equipment value — ensures the business is priced accurately and fairly.
This is the same method used by:
SBA lenders
Professional business brokers
Private equity groups
Industry buyers
It’s the gold standard for this industry.
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"They Will Work Till They Die!"
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