HVAC is a business that will always be needed. Heating, Ventilation and Air Conditioning are here to stay. No one wants to live in a house or condo, or apartment without it. Same for walk-in stores and public buildings. That makes it one of the best choices of business sub categories in the general field of Construction, Service and Maintenance. HVAC can be B2B (Business to Business) or B2C (Business to Consumer). ProBiz Business Consulting is your HVAC sales and installation business acquisition consultant.

What You Need to Know to Run an HVAC Company

First, it is highly competitive. The Owner’s personal influence is a big factor in sustainability. So, in addition to product and industry knowledge,

Second, there are licensing requirements. See the article on  How to do a Required License “Work Around”.

Third, ‘Running a Business’ is running a business, so don’t be intimidated. If you have EVER owned and run a business, you are ahead of the game.  Even if you have little or no history of ownership experience, if you come out of the business world, you already know a lot. That being said, this is where an Independent Business Consultant (NOT the Selling Broker!) becomes an urgent need. You could easily make the worse decision of your life. I encourage ‘first time ownership’ and over 60% are. Small business is the backbone of the United States and World economy! But please, please, please! Be sure to engage outside help and guidance.

Can I Just Be a Passive Owner of an HVAC Company?

The answer is: You can and you should! Passive Ownership is suited to this area more than a few others. If you want to invest, passively own, have the financial wherewithal and want to benefit from passive income, and flow-through tax deductions and other ownership advantages, the HVAC Industry is one of the better choices. The primary reason is the stability and long-term aspects of this industry. Compare this to, say a (1.) start-up, (2.) a tech company, (3). Or a retail store location. Any of those individually may be excellent acquisitions, of course, but in general things could change a great deal in the near future. But HVAC isn’t going anywhere. As I said at the onset. It will be long-term needed.

Are There Many HVAC Companies for Sale to Choose From?

Not that many, or the market would be flooded.  But due to retirement of the Owners, this seems to be a category that annually has ‘quality opportunities’ in most markets. The hard part is not finding an HVAC for Sale. The Business Broker will list and advertise it prominently. The hard part is discerning the price and quality of the business opportunity. If you only have the Selling Broker or your Tax Preparer advising you, you may make the mistake of over paying, missing out of better terms, such as greater Owner Financing percentages, or leaving ‘change on the table’.

Leaving Change of the Table

What do I mean by ‘leaving change of the table”?  The best answer might be a present example of how I recently saved a Buyer $160,000 on a Five Million Dollar HVAC LOI. (Letter of Intent).

How I Saved a Buyer $160,000 on a Five Million Dollar HVAC LOI

The Buyer hired me to assist in preparing an LOI on an HVAC company he had found on his own with a Broker. He had signed their NDA (Non Disclosure Agreement) and received the CIM (Confidential Information Memorandum), met the Owners, competed a site visit and approved the price, terms and financials which indicated about a million dollars of ‘Adjusted Cash Flow’.  He was prepared to make a full price offer in exchange for less cash down at closing and over all, it was a very fine deal. But there was one thing he missed in the details of the Income Statement and Balance Sheet. This was four of the company’s 40 service trucks and work vans that were used by the Owners personally.  They were not required for HVAC daily operation.  In fact, the Owners assumed they were outside of the sale. But that was not correct and would have been a major bombshell at closing that might have ruined 90 days of time and expense. Once I discovered this, I helped the Buyer save $160,000. The four were nearly new and expensive high-end pickup trucks.  The Buyer did not need them and the Owners expected to drive away from the $5,000,000 closing in these same trucks. After I did a simple appraisal, and we deducted $`160,000 from $5,000.000.

The point is, and this applies to many buy-sell, merger and business acquisitions. The Business Acquisition Consultant, and in this caseHVAC Sales and Installation, almost always saves you a multiple of the modest Consulting Fee.