HVAC Companies in Northern California Set for Acquisitions
There are an increasing number of business owners in the environmental and facilities services industry who are preparing to retire. As a result, investors are looking at an industry segment full of opportunities for acquisition. There are also some other factors driving sub-sectors of business services towards consolidation. Let’s look at the details of HVAC.
HVAC Services
Experts believe that the Sacramento region is definitely “a sellers’ market.” Business advisors like Andrew Rogerson will tell you that there are quite a few buyers and that more sellers are needed.
Ultimately they note that multiples have remained constant but are creeping up. Those experts say that they prefer to quote 3-6x EBITDA for their clients, admittedly a relatively wide range. However, they explain that each valuation is dependent upon revenue streams and many additional factors—in some instances contractors are looking to sell when they aren’t making a profit, breaking, or operating at a loss. The 3-6x zero still adds up to zero.
One of the reasons for the increased activity in sales of HVAC services companies is the fact that the industry has low barriers to entry. Any individual who attended trade school and knows mechanics can be brought up to speed on HVAC systems fairly quickly.
From Big to Small
First of all, it’s not that uncommon for a handyman to begin working on a neighbor’s house. Afterward, they learn how to become a plumber, obtain a license, and run a small plumbing repair business out of their truck. Relying only on word of mouth, a good plumber with this set-up can see $100,000 a year. With this relatively simple path to a new career, the market in northern California currently is divided among many of these ones- and two-person outfits—with a group of slightly larger companies. Those that have a $2-10m EBITDA and employ half a dozen or 10 employees. Lastly, there are top-tier companies that dominate the market. It’s these top-tier companies who are service experts and are increasingly seeking to acquire smaller shops. Likewise, with a growing number of private equity (PE) firms.
Experts say that PE is definitely more numbers-oriented, as you would imagine. The goals of these players really vary by firm. There are those who are more founder-oriented and want to do everything they can to run and increase the business, along with some who run the business from a spreadsheet.
Recent Acquisition
For example, Source Refrigeration recently announced the acquisition of RSI, a provider of commercial refrigeration installation and maintenance services. They cater to supermarkets, distribution centers, and cold storage facilities in Northern California. They’re headquartered in Sacramento.
Source’s operations in Northern California will be merged with RSI, and the combined operations will be headed by RSI’s founder, Sam Wilson. They will operate under the Refrigeration Solutions brand name.
Business is Andrew’s Business.
He’s been serving the State of California and the Sacramento area including Sacramento County, as well as Solano County, Yolo County, Sutter County, Placer County, El Dorado County, Amador County, San Joaquin, Contra Costa County, the California Central Valley, and the entire San Francisco Bay Area.
Andrew can help you with organizing your HVAC financial and operating information to best promote your business to prospective buyers. Take the time to speak with Andrew about selling your HVAC or other company, or visit our website services. Contact Andrew via email or call him at (916) 570-2674.
This is part of the tips to sell a construction company in California series ->
