HVAC
Sell an HVAC Business
How to Sell Your HVAC Business for Maximum Value
Use a skilled business broker
When it comes to owning your HVAC business, there are a few basic choices. You can keep it and run it forever, pass it on to your children, or sell it. If you have been thinking about how to sell your HVAC business, there are many important considerations that go into making a deal. After all the blood, sweat, and tears that you have poured into your company, you definitely want to ensure that you get your money’s worth.
If you have been wondering how to sell your HVAC business, now is a great time to think and plan.
HVAC sales are on the upswing. Last year saw 186 transactions involving HVAC companies in the U.S., just a few short of the 198 deals reported in 2021, according to Kevin Wilson, a principal at The DAK Group who often works with people looking to sell HVAC businesses. By comparison, there were 133 HVAC business deals in 2020, Wilson said.
WHEN TO SELL
Choose the Right Time
There are several ways to clarify how to sell HVAC business and when you will be ready to do that.
NOW Group
You are ready to sell today and be completely out in 6-12 months.
SOON Group
You want to be completely out within 5 years but would maybe sell a piece of the business today, put some cash in the bank, take some of the pressure off yourself and keep running it for a few years. After a few years you would then sell the rest (two bites at the apple).
ONE DAY Group
Selling HVAC business is 5+ years away but you want to understand the value of the business today and be sure you focus on the right metrics to maximize the value of the business and make it appealing to a future buyer.
PERSONAL GOALS
For some owners, it is part of a personal plan. For example you might want to retire or sell at a certain age. For others, you wake up one day and say enough is enough, or maybe the wear and tear on your body says it for you. Then there is a group that develops other interests in maybe another business or investing in real estate.
BUSINESS PERFORMANCE/VALUATION
One way to start asking “Should I be selling my HVAC business?” is when the performance or value of the business reaches a certain level. It might be that the growth rate, profitability or cash flow has been strong for several years and it is obvious potential buyers will find that attractive. It might be that a number of buyers of HVAC businesses from several different sectors like private equity, consolidators or other strategic buyers are aggressively pursuing HVAC companies as part of growth strategy and it is timely in terms of valuations they are willing to pay.
INDUSTRY CHANGES and ECONOMIC CHALLENGE
There could be challenges in the industry or economic conditions that make this a compelling time to consider selling your HVAC business. The HVAC industry has an aging workforce and there are not enough younger workers entering the workforce to fill the gap. This is creating labor scarcity, making hiring and retaining a real challenge. This combination is pushing labor costs higher, impacting profitability.
MARKET AND ECONOMIC CONDITIONS
There are both positive and negative factors that could make this a good time to consider the sale of your business. The size and fragmentation of the industry makes it possible for larger companies to acquire and integrate smaller companies, increasing market share and creating economies of scale. Combined with the ability to grow geographically, expand and diversify services, and utilize a more professional recruiting and training process, this creates competitive advantages and supports growth objectives. The possibility of a recession, inflation and supply chain issues increase the challenges of running a HVAC business today and could accelerate your decision to sell your HVAC business.
SUCCESSION CONCERNS
Many HVAC owners originally thought their children might want to take the business over one day. But after seeing how hard their parents have worked with the business and having other career aspirations, that is not an option, and parents are now thinking how to sell my HVAC business. Generally, staff and management do not have the business acumen to buy the business. By selling the business you can achieve your objectives and your employees will be needed by the owner to continue to run and grow the business. This might even create greater career advancement opportunities and benefits being part of a larger company.
TYPES OF SALES
Which is for me?
There are two types of sales that can be explored in order to sell your HVAC business, a full sale and a partial sale. Each has different financial, transition and commitment objectives.
Full Sale
Under a full sale you are selling 100% of the business, staying on for a short transition period, then exiting the business completely. It usually takes 6-9 months to get the business sold, and then the transition period can last 3 months to 2 years.
In order to sell HVAC business, your responsibilities will be clearly defined during this period, as will your compensation. This is for HVAC sellers that are interested in how to sell my HVAC business immediately.
Partial Sale
With a partial sale usually you are selling a majority stake in the business (between 70-80%) and leaving an equity ownership in the business.
You and your partner are working together to manage and grow the business for a total sale in perhaps 2-5 years. This has the advantage of allowing you to “pull some chips off the table”, put some money in the bank, but continue to stay involved. This way you become part of a larger company, take advantage of what that brings from a scale standpoint, grow the business further, then sell the remaining piece in perhaps 2-5 years and get a “second bite of the apple”. This strategy is for HVAC business owners that have more of a 2-5 year time frame.
Long-Term
Sale Preparation
For those that want to understand how to sell HVAC business in 5+ years, there are many things that you can be doing to prepare the business for a future sale.
The biggest factor is understanding what the valuation of the business is today, what it could be tomorrow, and how it will be viewed by a buyer. To sell your HVAC business, you need to do everything possible to maximize the value and attractiveness of the business. Of critical importance are the overall profit levels and cash flow of the business. Forget what the tax returns say: What is the real cash flow of the business? The greater the cash flow the greater the multiple, which leads to a higher valuation. Protect your retirement by having this conversation sooner rather than later.
If you have been thinking “I want to sell my HVAC business,” contact the experts at Brentwood Growth to take advantage of our expertise. Planning ahead is the key to success, and we are only compensated after a successful sale. We can help you sell your HVAC business for a maximum of profits and a minimum of headaches
WE’RE HERE FOR YOUR SELLING PROCESS
Value Enhancement
HVAC business owners work hard to run their businesses, but many times they do not plan accordingly for the sale. Factors such as key metrics and proper reporting could dramatically impact the valuation or sales process.
We develop a value enhancement plan so that your business can be best represented.
WHAT WE DO
Commercial and Residential HVAC Business Advisors
Maximize the value of your HVAC business, obtain multiple offers, and have choices.
HVAC Business Valuation
Our free hvac business valuation helps you understand your market value.
Goal Exploration
Whether you’re looking to sell today or in 10 years our goal never changes – to maximize your value and experience.
Sell for Maximum Value
Once you’re ready to sell we use our network of over 400 investing partners to find the best fits and maximize your return.
Do You Know What Your Business is Worth?
Why Work With
Brentwood Growth
Access to Buyers
Over 400 private equity firms and consolidators that are actively looking to purchase.
Confidentiality
Ensure the sale of your business remains confidential to avoid disruptions for you.
Industry Expertise
More than 20 acquisitions with transactions from $80 million with an average of $4 million.
Valuation
Learn the value of your business and receive support with pricing to the market.
Negotiation
As your mediator, we work with you and the buyers to make sure both parties are satisfied.
Experience
Lead by a team with 75+ years of experience. Our experience ensures a smooth experience.