Looking for a holding company business plan? You're in the right place.
A holding company that owns operating businesses has to answer two sets of questions: the ones a seller, bank or investor asks about each business, and the ones they ask about the layer on top. What is a fair price for each company? How are the purchases paid for? What does the parent cost, and who pays for it? Which cash moves between companies, and what does the group look like once those transfers are taken out? A blank template does not show what a sensible answer looks like.
In this article we'll walk through a complete sample plan for a holding company in Indianapolis, Indiana that owns a commercial cleaning company, a grounds and snow company and, from year three, a heating and cooling company. We'll cover the executive summary, the SWOT analysis and, above all, the financials: a consolidated view of the group and then the parent on its own.
Here's what you'll take away:
- The executive summary: see how to describe a group of several businesses on one page, so a reader knows what is being bought and what is being asked for
- The purchase table: find out how to set out price, equipment, goodwill and the seller's earnings side by side, so a lender can check the multiple
- The SWOT analysis: learn how to name a thin margin and a dependence on the weather without putting a reader off
- The entity tables: understand what each subsidiary earns, what a management fee does and does not change, and why the parent can lose money while the group profits
- The first year, month by month: spot the winter months that lose money before you reach them, and plan the cash reserve around them
- The five-year profit, cash flow and balance sheet: follow how a second round of acquisition debt shows up in cash and cover
- The downside case: have an answer ready for "what if revenue is 20% short?", with the steps the owner takes, including not making the third purchase
If you're planning a holding company, read this before you write your own. The group is fictional, so take what fits and change the rest.
In this plan
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The Group in One Page
Ridge Terrace Holdings, Inc. is an Indiana corporation that buys and runs small local service businesses in the Indianapolis area. It closes on two of them on 1 January 2027 and a third on 1 January 2029. Facility Care cleans commercial buildings under monthly contracts. Ridge Terrace Grounds mows, landscapes and plows snow for commercial properties and homeowners' associations. Ridge Terrace Heating & Air, the 2029 purchase, services and replaces residential heating and cooling systems. Marcus Hale is the group CEO and owns 30% of the shares. Two outside investors own the other 70%.
The group raises $2,190,000 at launch: $1,390,000 from the investors, $200,000 from Marcus, a $400,000 bank loan and $200,000 of seller notes. Of that, $1,430,000 buys Facility Care and Grounds, $98,000 pays for diligence, lender fees, equipment and announcements, and $662,000 stays as a cash reserve. The 2029 purchase is funded separately with $830,000, of which $600,000 is debt.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $4,479,060 | $5,083,500 | $8,088,700 |
| Net income after deal costs | ($62,038) | $80,354 | $34,165 |
| Closing cash | $432,202 | $551,208 | $553,810 |
Year 1 is close to break-even before deal costs: EBITDA of $219,439 on revenue of $4.5 million, and a net profit of $23,962 before the $86,000 of closing costs. Most of the year's profit arrives between April and November. January to March and December lose money, because snow revenue does not cover the Grounds crew and the cleaning contracts alone do not cover the parent.
The group's margin is thin by arithmetic. Facility Care earns about 12% of its revenue before any fee to the parent, Grounds earns 10% in Year 1 and 11% in Year 2, and the parent costs $289,050 to run in Year 1. A 5% management fee from each subsidiary does not cover that cost until the third business arrives. The financial section sets out the consolidated numbers first and then takes the parent out on its own.
The return is modest: net income runs from $23,962 before deal costs in Year 1 to about $184,000 in Years 4 and 5, on $1.82 million of paid-in capital. If revenue runs 20% below plan, the group does not buy Heating & Air, cuts crews and managers, trims marketing, pays no distributions and asks its lenders for a covenant reset. Cash stays positive in all five years, but the group loses money every year and its debt service cover falls to 0.97x in Year 4, so a lender would ask for a waiver or fresh equity. The financial section sets out that case in full.
How Ridge Terrace Is Built
Legal structure
Parent: Ridge Terrace Holdings, Inc., an Indiana corporation. It owns 100% of each subsidiary, employs the CEO and controller, holds the bank debt and charges each subsidiary a management fee. Subsidiaries: Ridge Terrace Facility Care, LLC; Ridge Terrace Grounds, LLC; and, from 2029, Ridge Terrace Heating & Air, LLC. Each is a separate company with its own insurance, vehicles and employees, so a claim against one does not reach the others' assets. A lender may ask for guarantees across the group, and the bank loans carry them. Shareholders: Marcus Hale 30%, two outside investors 70% between them. Start date: 1 January 2027. Both first-round purchases are asset purchases that close on the same day.
What each business sells
| Business | What it sells | How it earns | Year 1 revenue |
|---|---|---|---|
| Facility Care | Nightly and weekly cleaning of offices, clinics and light-industrial buildings, plus floor, carpet and window work | Monthly contract per building, one-off project fees | $2,776,660 |
| Grounds | Mowing and maintenance, mulch and planting, snow and ice management | Seasonal contracts, one-off jobs, snow contracts | $1,702,400 |
| Heating & Air (2029) | Repairs, system replacements, yearly maintenance agreements | Per call, per install, yearly agreement | $0 (arrives Year 3) |
What the parent does
The parent does five things: it buys businesses, finances them, keeps one set of books, sets safety and insurance standards, and replaces a general manager who leaves. It does not sell to customers or run crews. A consolidated view therefore shows three operating companies and one overhead, and the model prices that overhead explicitly.
Where intercompany money goes
Each subsidiary pays the parent a management fee of 5% of its revenue. The parent lends part of each purchase price to the subsidiary as an intercompany loan at the parent's own borrowing rate and puts in the rest as share capital. Subsidiaries pay dividends upward when they hold cash the business does not need. All three flows disappear when the accounts are consolidated, which is why the headline tables in this plan do not show them. The entity tables in the financial section put the management fee back in so the parent's own result can be read.
Licensing and local rules
The plan treats cleaning and mowing, landscaping and snow work as needing no state licence, and confirms that in diligence. The plan offers no fertiliser or pesticide application; adding it would bring applicator certification into scope. The Bureau of Labor Statistics notes that the EPA requires nearly all HVAC technicians to be certified in refrigerant handling, and the Heating & Air purchase is conditional on the technicians holding that certification. City and county contractor rules for heating and cooling are confirmed during diligence on the third purchase and are not stated here.
What a lender and the investors will ask
- Personal guarantees. The bank loans carry a personal guarantee from Marcus and cross-guarantees from every subsidiary. A guarantee from the parent alone would be weaker for the bank, because the assets sit in the subsidiaries.
- Customer concentration. The plan keeps every Facility Care account at or below 4% of that company's revenue and no Grounds property above 3%. Diligence tests the ten largest customers of each business, and a seller with a larger share would face a lower price or a larger seller note.
- Change-of-control and assignment clauses. Cleaning and property-management contracts, and the leases on the shops and yards, may need the customer's or landlord's consent when the business changes hands. The purchase agreements make the consents a condition of closing for the largest contracts.
- Indiana heating and cooling licence. The plan has not confirmed what Indiana or the City of Indianapolis requires of an HVAC contractor or its technicians. That is confirmed with the licensing agency and the city before the 2029 purchase is signed.
- Seller non-compete. Each seller signs a five-year non-compete and a non-solicitation covenant covering customers and employees.
- Quality-of-earnings review. An independent accountant tests each seller's earnings, the owner's pay add-backs and the customer list before closing. The $62,000 diligence line in the launch funding covers the first two purchases, and $48,000 covers the third.
- Investor exit. The model has no sale. The investors, who hold 70%, expect a sale or refinancing of the group within five to seven years, with the usual drag-along and tag-along rights. Their return depends on that exit, as the financial section shows.
The Indianapolis Service Market
The pay these businesses depend on
The Bureau of Labor Statistics reported a median of $17.71 an hour ($36,840 a year) for janitors and cleaners in May 2025 and projects 2% employment growth from 2025 to 2035. For grounds maintenance workers the median was $19.27 an hour ($40,080) with 5% projected growth, and for HVAC mechanics and installers it was $61,010 a year with 11% projected growth. These are national figures, and Indianapolis pay is likely to be lower than the national median, so a local pay survey would replace the cleaning wage. The model pays cleaners $17.79 an hour, the seasonal grounds crew $19.23 (four cents under the median, with crew leaders at $46,000) and technicians $64,000, and adds a pay rise of 3% a year.
The cleaning median is the number that matters most. Cleaners and team leads are 65% of Facility Care's Year 1 revenue, so every 1% on that wage line moves group EBITDA by about $18,000.
Who else could win the work
Indianapolis has no shortage of cleaning, grounds and heating-and-cooling firms, and each of the three trades is served by the same few types of competitor.
| Competitor type | What it offers | Why a customer picks it | How Ridge Terrace answers by design |
|---|---|---|---|
| National facility-services contractors | Cleaning, grounds and maintenance for multi-site clients | One contract for many cities | A local manager with decisions made in Indianapolis |
| Owner-operated local cleaning and lawn firms | Low price, personal service | The owner answers the phone | Insurance, backup crews and written scopes |
| Franchised home-service brands | Heating, cooling, plumbing under one brand | Brand recognition and financing offers | Technicians employed by a local company, yearly maintenance agreements |
| Independent HVAC contractors | Repairs and replacements | Long local history | Dispatch software and a service-call guarantee in the proposal |
| In-house staff at the customer | Cleaning or grounds by the property's own employees | No outside fee | Cost per square foot and a defined service level |
The table describes categories and makes no claim about any named company's prices. Providers publish their own.
Strengths and exposure
| Strengths | Exposure |
|---|---|
| Three businesses with different peaks: cleaning is flat, grounds peaks in summer, heating and cooling peaks in summer and winter | Cleaning margin is about 12% and wages are two-thirds of revenue |
| Contract revenue is 84% of Year 1 revenue | Group costs at the parent are 6.5% of Year 1 revenue |
| Prices are about two times each seller's earnings | The CEO owns 30% of a company he runs, and the investors can replace him |
| Purchase debt is 27% of launch funding | A mild winter cuts Grounds snow revenue ($326,800 in Year 1) |
| Openings | Threats |
|---|---|
| Customers who want one billing relationship for cleaning and grounds | A larger firm discounts to win a building-management portfolio |
| Sellers retiring with no successor | Cleaner turnover pushes wages above the plan |
| Cross-selling heating-and-cooling agreements to Facility Care's building managers | Equipment prices rise before the 2029 purchase |
Who Pays the Invoices
Facility Care sells to the person responsible for a building: an office manager, a medical practice administrator, a property manager. The decision is a bid compared on price and references. The trigger for change is a missed clean, a complaint that does not get answered, or a price rise the current supplier cannot explain. A 3-to-5-night-a-week contract of this kind averages $1,980 a month.
Grounds sells to homeowners' associations, retail and office parks, apartment communities and a smaller group of homeowners. A property manager signs the mowing contract and a separate snow contract, and the two are usually bid in the same season. About 140 properties are under mowing contract in Year 1 at a seasonal average of about $6,600. About 60 commercial lots carry snow contracts at an average near $5,400 a winter.
Heating & Air sells to homeowners, mostly after a breakdown or a quote that is too high to accept. Replacement is an infrequent purchase. Repairs and yearly agreements produce the repeat revenue. The 2029 plan counts about 2,700 repair calls at an average near $350, about 120 system replacements at an average near $9,500 and about 2,100 maintenance agreements near $243 each.
The three customer groups barely overlap. A building manager who signs a cleaning contract may also sign for grounds, and a few may use the heating-and-cooling company, but the plan counts on none of that for its revenue.
Winning and Keeping Contracts
Facility Care's account book
Facility Care starts with 96 accounts and ends 2027 with 115. At a 12% yearly loss of accounts, that net gain needs about 32 new accounts in the first year. The general manager runs the sales calls in Year 1 and a commercial account manager joins in month 14.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Accounts at year end | 115 | 124 | 134 | 143 | 150 |
| Revenue per paid labour hour (cleaners and leads) | $34.16 | $35.19 | $36.12 | $37.18 | $38.02 |
The second row is a check on pricing. Hours per account are held constant, so revenue per paid labour hour rises with the 3% yearly price increase, from $34.16 to $38.02. The wage rise is charged on a separate line, which is why the margin does not widen in step.
How contracts are priced
Cleaning contracts are priced per building on a measured scope: area, frequency and floor type, with a labour-hour estimate behind the monthly fee. Grounds contracts are priced per property per season, and snow is priced per push or as a seasonal fee. Seasonal snow fees stabilise cash but are the most exposed to a winter with too little or too much snow. Heating-and-cooling repairs follow a published flat-rate price list.
Keeping what is bought
The main intangible in each purchase is the customer list. The seller stays on a transition agreement for six months at Facility Care and for the first winter at Grounds, and the plan budgets $24,000 and $18,000 for those periods. A portion of each price is a seller note, interest-only for two years, and each note allows the group to set off losses on contracts the seller misdescribed.
Marketing by Business
The group spends $75,700 on marketing in Year 1: $42,000 at Facility Care, $29,700 at Grounds and $4,000 at the parent. The parent's share is investor reporting and the group website. The $10,000 of launch cost for announcements and signage comes from start-up funding.
Facility Care
The $42,000 spent in Year 1 divided by about 32 new accounts is about $1,310 per account, roughly two-thirds of one month's fee. The budget goes on three things: a bid desk that answers requests for proposals within two working days, referral introductions from property managers and commercial brokers, and a website with a measured-scope quote form.
Grounds
Most of the $29,700 is spent between January and March, when property managers choose next season's contractor. The money buys printed bid packs, direct visits to the 60 largest managed properties in the territory and a local search listing. In Year 2 the budget is $31,100, and it is expected to win about eight more mowing properties (140 to about 148) and a few snow lots, which with the 3% price rise gives Year 2 mowing revenue growth of 8.7%. A sixth crew leader joins in month 13 to carry that work. Snow contracts are sold in the autumn, and a fall mailing to existing mowing customers is the cheapest channel.
Heating & Air from 2029
From the third purchase, Heating & Air spends $104,400 a year, about 4% of its revenue, rising to $108,800 and $113,100. The channels are local search, a yearly agreement offer to every customer served and a seasonal reminder before the first cold week and the first hot week.
Running Three Operating Companies
The premises
Facility Care operates from about 6,000 square feet of light-industrial space with offices, stockroom and a loading door, at $53,200 a year. Grounds operates from a fenced yard and a shop at $64,800. The parent's office is a corner of Facility Care's building, charged at $12,000. Heating & Air's shop and showroom costs $65,300 from 2029.
How the work is done
At Facility Care the working team leads clean alongside the crew and inspect each building weekly. Cleaners are part-timers who work about 28 hours a week; 36 full-time equivalents at the end of 2027 are about 50 people. Staffing is set at 0.315 full-time equivalents for each account, plus one lead for every 20 accounts.
At Grounds five crew leaders (six from month 13) and a manager work year-round. A seasonal crew of 14 works April to November. In winter the leaders run subcontracted plow operators and handle walks and salt by hand.
At Heating & Air eight technicians (nine from month 43) and four install helpers (five from month 49) do the work, with one comfort advisor who quotes replacements, two dispatchers and a general manager. Revenue per technician is about $325,000 in 2029, which the buyer would test against the seller's actual call logs and the technicians' available days.
The shared back office
One controller keeps the group's books on a single accounting system, produces a monthly consolidated report and manages the intercompany balances. A safety and HR manager joins when the third business is bought (and is not hired in the downside case) and handles insurance claims, workers' compensation reviews and training records across all three companies. Payroll, accounts payable and tax filing for each subsidiary are done centrally.
Insurance and safety
Each subsidiary carries its own general liability, commercial auto and workers' compensation cover, and the parent carries management liability and an umbrella policy. Insurance costs $108,300 in Year 1, $39,200 of it at Facility Care and $62,100 at Grounds, where plow liability and the number of vehicles drive the premium. A claim at one subsidiary stays in that subsidiary's loss record.
Equipment
Vehicles and machines are bought with the businesses, valued at $110,000 for Facility Care, $180,000 for Grounds and $200,000 for Heating & Air. Replacement of floor machines, mowers, plow blades and tools is budgeted as a yearly expense from Year 1, so none of it needs funding from outside.
Who Runs It
Marcus Hale, group CEO
Marcus spent eleven years in operations management at a regional facility-services contractor, the last four as director of operations responsible for about 600 employees across cleaning and grounds contracts in Indiana and Ohio. He holds a business degree from Indiana University. He puts in $200,000 of his own money, rolls over retirement savings into the company, draws $90,000 a year and owns 30% of the shares.
Gaps in the team
Marcus has run operations but has not bought a company, has never run heating-and-cooling work and has not sold to homeowners. The plan fills those gaps with a transaction lawyer and a quality-of-earnings accountant on each purchase, a hired general manager with an HVAC background at Heating & Air, and an investor who has bought service businesses before.
Subsidiary managers
Each business has a general manager who is not the CEO. The Facility Care manager is paid $68,000, the Grounds operations manager $64,000 and the Heating & Air manager $82,000. The CEO holds a monthly review with each. Managers receive a bonus tied to their company's profit after the management fee, which is not in the model and would be paid from the profit shown.
Who can replace whom
The investors hold a majority and can replace the CEO. The seller of each business signs a non-compete that runs for five years, and the plan's seller notes act as a holdback against losses the seller did not disclose. Key-person life and disability cover on Marcus is budgeted in the parent's insurance.
Outside help
A part-time adviser with experience in service-company acquisitions reviews each deal. Outside tax and legal advice costs $26,000 in Year 1, which includes setting up the structure and the first consolidated tax return.
Group Financials, With the Parent Broken Out
The model treats Ridge Terrace as one consolidated group: three operating companies and the holding company that owns them. Anything one group company charges another is left out, because it cancels on consolidation. Year 1 is monthly and Years 2 to 5 are annual. The entity tables after the profit and loss split the same EBITDA back into the businesses and the parent.
Purchase prices and how they are paid
| Use of funds | Amount |
|---|---|
| Purchase of Facility Care (vehicles, machines, customer contracts, goodwill) | $910,000 |
| Purchase of Ridge Terrace Grounds (trucks, mowers, plows, contracts, goodwill) | $520,000 |
| Group laptops, accounting hardware and phones | $12,000 |
| Diligence: quality-of-earnings reviews, legal, entity set-up | $62,000 |
| Lender fees, business licences and insurance transfers | $14,000 |
| Customer and staff announcements, rebrand and signage | $10,000 |
| Cash reserve: receivables build, winter dip and integration | $662,000 |
| Purchase of Heating & Air (vans, tools, customer base, goodwill) | $700,000 |
| Diligence and legal for Heating & Air | $48,000 |
| Lender fees, licences and fleet insurance transfers (Heating & Air) | $12,000 |
| Cash reserve for Heating & Air receivables and integration | $70,000 |
| Total uses | $3,020,000 |
| Source of funds | Amount |
|---|---|
| Marcus Hale's savings and rolled-over retirement capital | $200,000 |
| Two outside investors (together 70% of the shares) | $1,390,000 |
| Bank acquisition term loan (Facility Care and Grounds) | $400,000 |
| Seller note, Facility Care | $140,000 |
| Seller note, Grounds | $60,000 |
| Bank acquisition term loan (Heating & Air) | $450,000 |
| Seller note, Heating & Air | $150,000 |
| Follow-on equity from existing investors (Heating & Air) | $230,000 |
| Total sources | $3,020,000 |
Two closings are shown together. On 1 January 2027 the group buys Facility Care and Grounds for $1,430,000 between them and puts $662,000 aside as a cash reserve. On 1 January 2029 it buys Heating & Air, paid for by a new bank loan, a seller note and a follow-on investment from the same two investors. Uses and sources each total $3,020,000 across the two dates.
| Business | Closes | Price | Of which vehicles and equipment | Of which goodwill and contracts | Seller earnings used | Price per $1 of seller earnings | Price per $1 of modelled first-year EBITDA |
|---|---|---|---|---|---|---|---|
| Facility Care | 1 Jan 2027 | $910,000 | $110,000 | $800,000 | $420,000 | $2.17 | $2.72 |
| Grounds | 1 Jan 2027 | $520,000 | $180,000 | $340,000 | $255,000 | $2.04 | $2.99 |
| Heating & Air | 1 Jan 2029 | $700,000 | $200,000 | $500,000 | $300,000 | $2.33 | $3.62 (Year 3) |
Seller earnings are the owner's profit before the owner's own pay. In this example they are set equal to the model's own first-year EBITDA for each business plus the cost of the general manager who replaces the owner (and, for Heating & Air, its Year 3 EBITDA before the group's pay-rise line), so the seller's earnings and the model's EBITDA reconcile. The price per dollar of modelled EBITDA is the multiple a lender would test, and it is higher because the model charges a replacement manager. The prices are the example's own figures and are not a market quotation. A quality-of-earnings review would test every one of these earnings figures before closing.
Marcus Hale puts in $200,000 and holds 30% of the shares. Two outside investors put in $1,390,000 at launch and $230,000 in 2029 for 70%. On the cash alone Marcus would hold about 12% of the equity, so the 30% includes a share of the upside for running the businesses; an investor would negotiate that figure. The bank loans carry 9.75% (2027) and 9.5% (2029) over seven years with six months of interest only, and the seller notes at 6% over six years with two years of interest only. Those rates illustrate the example and are not quotes. At launch debt is $600,000 of the $2,190,000 raised; the 2029 closing is funded 72% by debt. The reserve is sized so that month-end cash, after allowing for receivables, does not fall below about $150,000 in Year 1; the low point in April, about $174,000, is a little over three weeks of average Year 1 payroll, and the group draws on the reserve through the first quarter.
What the numbers rest on
- Facility Care takes over 96 commercial cleaning accounts and ends 2027 with 115, billing $1,980 a month on average and rising 3% a year. Year-end accounts run 115, 124, 134, 143 and 150. The counts are net of a 12% yearly loss of accounts, so about 32 new accounts are won in Year 1. Periodic work (stripping and waxing floors, carpet extraction, windows, post-construction clean-up) adds $268,000 in Year 1.
- Cleaning labour is modelled as full-time equivalents at $37,000 (about $17.79 an hour for 2,080 hours), filled by part-timers working about 28 hours a week, with a 20% on-cost because part-timers carry no health cover. The Bureau of Labor Statistics reports a national median of $17.71 an hour for janitors and cleaners; Indianapolis pay is likely to be lower than the national figure, so the model's wage is a cautious choice but a local pay survey would replace it. Cleaner staffing is set at 0.315 full-time equivalents per account, one team lead for every 20 accounts and a general manager, which gives about 36 cleaner equivalents in December 2027.
- Grounds bills mowing and maintenance contracts from April to November, landscape enhancements from March to December and snow and ice contracts in the winter months. The Year 1 winter is an average snow season. About 140 properties are under mowing contract in Year 1 and about 148 in Year 2: Year 2 mowing revenue grows 8.7%, which is the 3% price rise plus roughly eight more properties, won with the $31,100 Grounds marketing budget (about $3,900 a property, roughly 60% of a season's fee at the Year 1 average of about $6,600). Snow revenue grows 10% in Year 2, from a few more lots and the same price rise. The seasonal crew of 14 works April to November at an annual-equivalent $40,000 ($19.23 an hour, four cents under the $19.27 national median for grounds maintenance workers), with five crew leaders and a manager year-round and a sixth crew leader from month 13, which is the crew step that carries the extra Year 2 work. Snow work is paid at 35% of its revenue to subcontracted plow operators and for salt.
- Heating & Air (from January 2029) earns from repairs and service calls (about 2,700 calls a year at an average near $350), from system replacements (about 120 at an average near $9,500) and from maintenance agreements (about 2,100 at an average near $243). It has 8 technicians (9 from month 43), 4 install helpers (5 from month 49), 2 dispatchers, 1 comfort advisor who quotes replacements, and a general manager. Revenue per technician is about $325,000 in Year 3, inside the $250,000 to $350,000 range the plan uses for a residential service business (a planning figure, not a sourced one). Technicians are paid $64,000 against the national median of $61,010 for HVAC mechanics and installers. Equipment is charged at 42% of replacement revenue and parts at 20% of repair revenue. Marketing is about 4% of revenue.
- The engine charges direct costs at one rate in every year, the blend of the Year 1 revenue mix. Heating & Air has no Year 1 revenue, so that rate would understate its equipment and parts. The model therefore adds a "direct-cost true-up" line to operating costs that lifts direct costs to each business's own rate. It is zero in Years 1 and 2 and $408,180, $422,037 and $438,711 in Years 3 to 5.
- Payroll adds 27% for payroll taxes, health cover, workers' compensation and a retirement match, and 20% on the cleaner line. Wages in the personnel table are launch rates. Pay raises of 3% a year are charged as a separate line from Year 2. Hiring follows the work: a Facility Care account manager in month 14, a group safety and HR manager in month 25 when the HVAC business arrives.
- The holding company has two people at launch, the group CEO at $90,000 and a controller at $75,000, plus a share of 1,000 square feet of office, outside tax and legal advice, group insurance and accounting software. Its running cost is $289,050 in Year 1 including $8,000 of integration cost. Each subsidiary pays the parent a management fee of 5% of its revenue. The fee is a transfer inside the group and does not change consolidated profit. Whether a given rate would be accepted by tax authorities is a question for an adviser.
- The parent borrows the acquisition debt and passes the money down to each subsidiary partly as share capital and partly as an intercompany loan that charges the parent's own interest rate. The interest the subsidiaries pay the parent offsets the interest the parent pays the bank, so the group sees only the bank and seller-note interest.
- Receivables average 30 days across the group. Facility Care and Grounds bill monthly on 30-day terms, Heating & Air collects most repair and replacement revenue at the visit. A single blended figure is used because the engine takes one.
- Purchase prices are split into vehicles and equipment (depreciated over 5 years) and goodwill and customer contracts. Goodwill is written off over 15 years, which is the period the IRS gives for goodwill and going-concern value in an asset purchase. The engine files the whole price under acquisitions and equipment and does not test goodwill for impairment.
- Tax is charged at the 21% federal rate and Indiana's 4.9% corporate adjusted gross income tax, with a loss carried forward. The model treats all companies as one taxpayer. Actual structure (S corporation, separate LLCs, consolidated filing) would change the figure.
- What the model cannot do. It treats the group as one taxpayer and has no balance sheet or tax return for each company. Fees, intercompany loans and dividends are calculated outside the engine and appear only in the entity tables. It records each purchase as a single price with no working-capital adjustment, earn-out or impairment test. It charges direct costs at the Year 1 blended rate and relies on the true-up line for Heating & Air. It uses one receivables period for the group. It has no monthly view after Year 1, so the seasonality of the HVAC business is not shown. The downside response is applied from month 1 rather than as the shortfall appears.
- Distributions to shareholders are $100,000 in Year 4 and $150,000 in Year 5, paid from cash the model shows the group can spare after debt service. The bank loans are kept on their schedule, so the group holds cash while it owes money.
Revenue by business line
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Facility Care: recurring cleaning contracts | $2,508,660 | $2,924,500 | $3,251,700 | $3,595,900 | $3,917,700 |
| Facility Care: periodic and project work | $268,000 | $314,000 | $336,000 | $355,000 | $373,000 |
| Grounds: mowing and maintenance contracts | $919,600 | $1,000,000 | $1,030,000 | $1,061,000 | $1,093,000 |
| Grounds: landscape enhancements | $456,000 | $485,000 | $500,000 | $515,000 | $530,000 |
| Grounds: snow and ice management | $326,800 | $360,000 | $371,000 | $382,000 | $393,000 |
| Heating & Air: service calls and repairs | $0 | $0 | $950,000 | $1,007,000 | $1,068,000 |
| Heating & Air: system replacements | $0 | $0 | $1,140,000 | $1,208,000 | $1,281,000 |
| Heating & Air: maintenance agreements | $0 | $0 | $510,000 | $551,000 | $595,000 |
| Total revenue | $4,479,060 | $5,083,500 | $8,088,700 | $8,674,900 | $9,250,700 |
| Growth on prior year | – | 13% | 59% | 7% | 7% |
Contracts carry the group. Facility Care's recurring contracts, the Grounds mowing contracts and the snow contracts are 84% of Year 1 revenue. Landscape enhancements and periodic cleaning are one-off jobs that follow the season. The 59% jump in Year 3 is the Heating & Air purchase; Facility Care and Grounds alone grow 8.0% that year. Years 4 and 5 grow about 7% a year, a mix of the 3% price rise and net new accounts.
The first twelve months, season by season
| Month | Facility Care: recurring cleaning contracts | Facility Care: periodic and project work | Grounds: mowing and maintenance contracts | Grounds: landscape enhancements | Grounds: snow and ice management | Heating & Air: service calls and repairs | Heating & Air: system replacements | Heating & Air: maintenance agreements | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 2027 | $190,080 | $16,000 | $0 | $0 | $117,800 | $0 | $0 | $0 | $323,880 | ($25,362) |
| Feb 2027 | $194,040 | $18,000 | $0 | $0 | $98,800 | $0 | $0 | $0 | $310,840 | ($36,889) |
| Mar 2027 | $198,000 | $21,000 | $15,200 | $34,200 | $22,800 | $0 | $0 | $0 | $291,200 | ($54,252) |
| Apr 2027 | $199,980 | $22,000 | $83,600 | $60,800 | $0 | $0 | $0 | $0 | $366,380 | $12,209 |
| May 2027 | $203,940 | $22,000 | $125,400 | $72,200 | $0 | $0 | $0 | $0 | $423,540 | $62,740 |
| Jun 2027 | $207,900 | $21,000 | $136,800 | $45,600 | $0 | $0 | $0 | $0 | $411,300 | $51,919 |
| Jul 2027 | $211,860 | $21,000 | $136,800 | $26,600 | $0 | $0 | $0 | $0 | $396,260 | $38,624 |
| Aug 2027 | $213,840 | $21,000 | $136,800 | $26,600 | $0 | $0 | $0 | $0 | $398,240 | $40,374 |
| Sep 2027 | $217,800 | $24,000 | $129,200 | $45,600 | $0 | $0 | $0 | $0 | $416,600 | $56,604 |
| Oct 2027 | $219,780 | $26,000 | $106,400 | $79,800 | $0 | $0 | $0 | $0 | $431,980 | $70,201 |
| Nov 2027 | $223,740 | $26,000 | $49,400 | $53,200 | $11,400 | $0 | $0 | $0 | $363,740 | $9,875 |
| Dec 2027 | $227,700 | $30,000 | $0 | $11,400 | $76,000 | $0 | $0 | $0 | $345,100 | ($6,603) |
Facility Care bills close to the same amount every month. Grounds produces the swings: snow and ice revenue in January and February, nothing in the summer from snow, mowing and enhancements from spring. EBITDA is negative in January, February, March and December, a combined loss of $116,503 across January to March, and positive in the other eight months. The lowest month-end cash balance falls in Apr, at about $174,000 after allowing for the 30 days clients take to pay.
Payroll by business
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and group CEO | $90,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Group controller (CPA) | $75,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Group safety and HR manager | $66,000 | Month 25 | – | – | 1 | 1 | 1 |
| Facility Care general manager | $68,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Facility Care working team leads | $46,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Facility Care cleaners (full-time equivalents, filled by part-timers) | $37,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Facility Care commercial account manager | $56,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Grounds operations manager | $64,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Grounds crew leaders | $46,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Grounds seasonal crew, April to November (annual-equivalent rate) | $40,000 | Month 4 | – | – | – | – | – |
| Heating & Air general manager | $82,000 | Month 25 | – | – | 1 | 1 | 1 |
| Heating & Air service and install technicians | $64,000 | Month 25 | – | – | 1 | 1 | 1 |
| Heating & Air install helpers | $44,000 | Month 25 | – | – | 1 | 1 | 1 |
| Heating & Air dispatchers and customer service | $42,000 | Month 25 | – | – | 1 | 1 | 1 |
| Heating & Air comfort advisor (salary plus commission) | $58,000 | Month 25 | – | – | 1 | 1 | 1 |
| Total payroll incl. on-costs | $2,959,338 | $3,322,867 | $4,733,263 | $4,926,577 | $5,173,043 |
The table above marks each line once. Crew lines stand for several people, so the head counts by company are below. A parent with 2 or 3 people sits over operating companies of 6 to 57. The cleaner line is full-time equivalents, filled by about 50 part-timers at the end of 2027. The grounds crew count drops in December because the seasonal crew is off payroll from December to March; the December figures therefore leave them out.
| December head count (full-time equivalents) | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Ridge Terrace Holdings (parent) | 2 | 2 | 3 | 3 | 3 |
| Ridge Terrace Facility Care | 43 | 48 | 51 | 55 | 57 |
| Ridge Terrace Grounds | 6 | 7 | 7 | 7 | 7 |
| Ridge Terrace Heating & Air | 0 | 0 | 16 | 17 | 18 |
| Group | 51 | 57 | 77 | 82 | 85 |
Group profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $4,479,060 | $5,083,500 | $8,088,700 | $8,674,900 | $9,250,700 |
| Direct costs at the blended Year 1 rate (supplies, materials, subcontractors) | ($519,482) | ($589,585) | ($938,129) | ($1,006,116) | ($1,072,898) |
| Gross profit | $3,959,578 | $4,493,915 | $7,150,571 | $7,668,784 | $8,177,802 |
| Payroll incl. on-costs | ($2,959,338) | ($3,322,867) | ($4,733,263) | ($4,926,577) | ($5,173,043) |
| Rent | ($130,000) | ($133,800) | ($214,000) | ($220,400) | ($227,100) |
| Utilities | ($12,200) | ($12,550) | ($20,800) | ($21,450) | ($22,200) |
| Marketing | ($75,700) | ($82,700) | ($193,100) | ($203,100) | ($213,400) |
| Insurance | ($108,300) | ($116,000) | ($181,800) | ($193,400) | ($205,300) |
| Professional fees | ($34,300) | ($28,300) | ($39,500) | ($34,700) | ($36,200) |
| Software subscriptions | ($50,600) | ($53,200) | ($90,600) | ($94,600) | ($98,600) |
| Fuel, vehicle repairs and registration | ($164,300) | ($178,200) | ($281,900) | ($300,200) | ($318,400) |
| Equipment replacement and tools | ($60,100) | ($70,000) | ($97,100) | ($107,900) | ($117,600) |
| Bad debt allowance | ($27,000) | ($31,200) | ($45,300) | ($49,200) | ($53,100) |
| Recruiting, background checks, uniforms, training and safety | ($68,300) | ($74,800) | ($97,400) | ($103,600) | ($110,400) |
| Seller transition support and acquisition integration | ($50,000) | $0 | ($32,000) | $0 | $0 |
| Direct-cost true-up (Heating & Air parts and equipment, and mix change after Year 1) | $0 | $0 | ($408,180) | ($422,037) | ($438,711) |
| Annual pay raises (3% a year) | $0 | ($99,686) | ($288,256) | ($456,827) | ($649,263) |
| EBITDA | $219,439 | $290,612 | $427,372 | $534,793 | $514,485 |
| Depreciation | ($137,000) | ($137,000) | ($210,333) | ($210,333) | ($207,333) |
| Interest | ($50,545) | ($46,658) | ($91,701) | ($79,127) | ($63,714) |
| Income tax | ($7,932) | ($26,601) | ($31,173) | ($61,017) | ($60,545) |
| Net income before start-up costs | $23,962 | $80,354 | $94,165 | $184,316 | $182,892 |
| Deal costs expensed at each closing (diligence, lender fees, announcements) | ($86,000) | $0 | ($60,000) | $0 | $0 |
| Net income after start-up costs | ($62,038) | $80,354 | $34,165 | $184,316 | $182,892 |
Year 1 earns a small profit of $23,962 before deal costs and loses $62,038 after the $86,000 of closing costs. Year 2 is the first profitable year on every measure. The purchase of Heating & Air lifts revenue by 59% in Year 3, but profit does not rise in step: the new business brings a lower margin, goodwill amortisation, interest on $600,000 of new debt and a $32,000 integration cost. Year 5 EBITDA is $20,308 lower than Year 4 although revenue rises $575,800: the pay-rise line grows by $192,436 while the extra revenue earns less than that after direct costs and the ninth Heating & Air technician. The gross profit row equals revenue less only the blended direct cost; the true-up line in operating costs holds the rest.
The return on the capital put in is low. Net income runs from $23,962 to $184,316 on paid-in capital of $1,590,000 at launch and $1,820,000 after 2029, a net return of 10% at best. The investors are paid mostly through the value of the businesses on exit, not through profit or the $250,000 of distributions, and an exit (a sale of the group or of a business, or a refinancing) is outside the model.
Each business's EBITDA before any management fee (what the business earns by itself, with its own manager's pay and its own direct costs charged to it; the parent's costs sit on their own line)
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Facility Care | $334,859 | $378,225 | $421,740 | $488,843 | $524,946 |
| Facility Care margin | 12.1% | 11.7% | 11.8% | 12.4% | 12.2% |
| Grounds | $173,631 | $199,173 | $199,645 | $196,302 | $192,734 |
| Grounds margin | 10.2% | 10.8% | 10.5% | 10.0% | 9.6% |
| Heating & Air | $0 | $0 | $193,123 | $244,571 | $204,796 |
| Heating & Air margin | – | – | 7.4% | 8.8% | 7.0% |
| Parent costs (holding-company payroll, office, advisers, insurance) | ($289,050) | ($286,787) | ($387,136) | ($394,924) | ($407,991) |
| Group EBITDA, as in the table above | $219,439 | $290,612 | $427,372 | $534,793 | $514,485 |
The same result after a 5% management fee, which each subsidiary pays the parent on its revenue and which disappears when the accounts are consolidated
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Facility Care after fee | $196,026 | $216,300 | $242,355 | $291,298 | $310,411 |
| Grounds after fee | $88,511 | $106,923 | $104,595 | $98,402 | $91,934 |
| Heating & Air after fee | $0 | $0 | $63,123 | $106,271 | $57,596 |
| Parent alone: fees received | $223,953 | $254,175 | $404,435 | $433,745 | $462,535 |
| Parent alone: its own costs | ($289,050) | ($286,787) | ($387,136) | ($394,924) | ($407,991) |
| Parent alone: result before interest | ($65,097) | ($32,612) | $17,299 | $38,821 | $54,544 |
| Group EBITDA (fees cancel out) | $219,439 | $290,612 | $427,372 | $534,793 | $514,485 |
Who pays the parent's debt service. The parent holds the bank and seller-note debt. Its own result above is negative or small, so the subsidiaries pay dividends up to cover interest and principal.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Subsidiaries: EBITDA after fees (cash available to pay dividends before tax and working capital) | $284,536 | $323,224 | $410,073 | $495,972 | $459,941 |
| Parent: result before interest | ($65,097) | ($32,612) | $17,299 | $38,821 | $54,544 |
| Parent: interest and principal on the group debt | $73,163 | $95,326 | $216,594 | $241,747 | $275,020 |
| Dividend the subsidiaries must pay up to cover the parent (the shortfall) | $138,260 | $127,938 | $199,295 | $202,926 | $220,476 |
| Subsidiary EBITDA after fees, per $1 of that dividend | $2.06 | $2.53 | $2.06 | $2.44 | $2.09 |
The tables show why the holding-company structure costs money. The parent's own costs are about 6.5% of revenue in Year 1, and a 5% fee does not cover them until Heating & Air joins in Year 3. In Years 1 and 2 the parent runs at a loss and relies on dividends from the subsidiaries, which is cash moved inside the group and not income.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($293,180) | $167,674 | ($2,505) | $346,469 | $342,899 |
| Acquisitions and equipment | ($1,442,000) | $0 | ($700,000) | $0 | $0 |
| Funding received | $2,190,000 | $0 | $830,000 | $0 | $0 |
| Bank and seller-note principal repaid | ($22,618) | ($48,668) | ($124,892) | ($162,620) | ($211,306) |
| Owner distributions | $0 | $0 | $0 | ($100,000) | ($150,000) |
| Net change in cash | $432,202 | $119,006 | $2,603 | $83,848 | ($18,407) |
| Closing cash | $432,202 | $551,208 | $553,810 | $637,659 | $619,252 |
Closing cash stays positive in every year, between $432,202 and $637,659. The 2029 purchase is paid for in the year it closes by the new loans and equity, so Year 3's investing outflow is matched by funding received. Principal repayments rise from $22,618 in Year 1 to $162,620 in Year 4 as the interest-only periods end. Distributions start in Year 4.
Group balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $432,202 | $551,208 | $553,810 | $637,659 | $619,252 |
| Accounts receivable | $368,142 | $417,822 | $664,825 | $713,005 | $760,332 |
| Acquisitions and equipment (net) | $1,305,000 | $1,168,000 | $1,657,667 | $1,447,333 | $1,240,000 |
| Total assets | $2,105,344 | $2,137,030 | $2,876,302 | $2,797,998 | $2,619,584 |
| Bank loans and seller notes | $577,382 | $528,714 | $1,003,822 | $841,202 | $629,896 |
| Paid-in capital | $1,590,000 | $1,590,000 | $1,820,000 | $1,820,000 | $1,820,000 |
| Retained earnings | ($62,038) | $18,316 | $52,480 | $136,796 | $169,688 |
| Total liabilities and equity | $2,105,344 | $2,137,030 | $2,876,302 | $2,797,998 | $2,619,584 |
Margins, debt cover and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | 4.9% | 5.7% | 5.3% | 6.2% | 5.6% |
| Net margin (before start-up costs) | 0.5% | 1.6% | 1.2% | 2.1% | 2.0% |
| Payroll incl. pay raises as share of revenue | 66% | 67% | 62% | 62% | 63% |
| Revenue per full-time equivalent at year end | $87,825 | $89,184 | $105,048 | $105,791 | $108,832 |
| Average monthly revenue | $373,255 | $423,625 | $674,058 | $722,908 | $770,892 |
| Monthly revenue needed to cover operating costs | $352,569 | $396,230 | $633,772 | $672,495 | $722,393 |
| Debt service cover (EBITDA / interest + principal) | 3.0x | 3.0x | 2.0x | 2.2x | 1.9x |
Debt service cover is 3.0x, 3.0x, 2.0x, 2.2x, 1.9x over the five years. Year 1 averages $373,255 of revenue a month against $352,569 needed to cover operating costs, so the group clears its operating costs by about 6% in its first year. Counting interest and principal as well, the monthly revenue needed is $359,466, $405,216, $654,189, $695,284, $748,318 across the five years, against average revenue of $373,255, $423,625, $674,058, $722,908, $770,892; the margin over break-even including debt service is thin in every year, about 4% in Year 1. The revenue-per-person row is measured in December, when the seasonal grounds crew is off payroll, so it reads higher than the year's average. The break-even rows treat all operating costs, including the true-up line, as costs to be covered at the blended direct-cost rate.
A 20% revenue shortfall, with the third purchase called off
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $3,583,248 | $4,066,800 | $4,390,960 | $4,727,120 | $5,045,360 |
| Net income before start-up costs | ($125,681) | ($54,008) | ($91,724) | ($43,692) | ($60,009) |
| Net income after start-up costs | ($211,681) | ($54,008) | ($91,724) | ($43,692) | ($60,009) |
| Closing cash | $378,805 | $392,841 | $379,282 | $346,769 | $288,925 |
Every revenue line falls 20% in every year. The response is drastic: Heating & Air is not bought, so the 2029 debt, staff and revenue are removed, and the safety and HR manager hired for it is not hired; the Facility Care account manager starts six months later; the cleaner crew is cut by 20%, one grounds crew leader and one Facility Care team lead go, the seasonal grounds crew drops from 14 to 11, the controller moves to a 60% role, marketing is cut by 20%, Marcus takes a 20% pay cut, vehicle, equipment, bad-debt and staffing costs fall 15%, Facility Care stays in its first premises and no distributions are paid. The group also asks its lenders for a covenant reset: the bank loans move to a ten-year amortisation with a year of interest only and the sellers accept three years of interest only.
On those terms cash stays positive in every year, never below $288,925, but the group loses money in every year and equity falls from $1,378,319 at the end of Year 1. Debt service cover is 1.2x, 1.7x, 1.2x, 1.0x and 0.8x across the five years (EBITDA of $62,319 in Year 1 rising to a peak of $135,058 in Year 4), so the group would breach a typical cover covenant from Year 4 even after the reset. Without the reset, Year 1 cover would be 0.85x. A lender seeing those figures would ask for a covenant reset or waiver, and the owners would have to cure it with fresh equity, sell a business or hand back the keys on a subsidiary. The model cannot show those outcomes. All of the levers are applied from month 1, which is generous: in practice crew cuts, a lender's agreement and the end of a purchase follow the lost revenue by months, so the real Year 1 EBITDA would fall below $62,319. With revenue 20% lower and no response at all, the model's cash is negative by the end of Year 1, because it keeps every crew and manager on payroll.
Sources
- Bureau of Labor Statistics, Janitors and building cleaners, Occupational Outlook Handbook: May 2025 median pay $36,840 a year ($17.71 an hour), 2% projected growth 2025 to 2035.
- Bureau of Labor Statistics, Grounds maintenance workers: May 2025 median pay $40,080 a year ($19.27 an hour), 5% projected growth 2025 to 2035.
- Bureau of Labor Statistics, Heating, air conditioning and refrigeration mechanics and installers: May 2025 median pay $61,010 a year, 11% projected growth 2025 to 2035, and the note that the EPA requires nearly all HVAC technicians to be certified in refrigerant handling.
- Indiana Department of Revenue, Tax types: corporate adjusted gross income tax rate of 4.9%.
- Internal Revenue Service, Instructions for Form 4562, Part VI: goodwill and going-concern value amortised over 15 years (180 months).
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