Advice for Selling an HVAC Business in Today’s Market
Maybe you have been doing HVAC for years and are burned out and ready to sell and retire. Maybe it is time for someone else in your family to take over, or you are looking for an outside buyer. Either way, you have decided it is time to sell. When it comes to selling an HVAC business, timing is a big part of the process.
Selling an HVAC business is different from selling many other businesses. the buyer must be licensed and experienced. They must have some knowledge about the field along with some business acumen. These should not be seen as obstacles but as opportunities. There are some questions you will need to be able to answer to sell an HVAC business in today’s market.
What is the Market Outlook in My Area?
Most HVAC businesses, in fact over 60% nationwide, are small and have five or fewer employees. They often specialize in either residential or commercial work and rely a lot on word of mouth for marketing.
Many buyers though may want to grow beyond that. What is the market outlook for your area? If there is a lot of new construction along with residential remodels, that market might be huge. These bring with them the installation of more efficient HVAC systems that are smarter and interact with apps and voice first devices like Alexa and Google Home.
Know what your potential for growth is, even if you are not looking to grow beyond a certain level yourself.
Should I Stay or Should I Go Now?
In a small HVAC business, customers may be loyal to you as much as they are to the business. The transition between owners can be a tricky one for your business. If you are engaged in owner financing or your sale has any earn-out clauses, you may want to stick around to make sure the transition goes smoothly.
Sometimes, if the buyer does not already work for you, they can work with you for a while before the sale is final, and this will ease the transition as well. It may take a little longer for you to actually retire, but the payoff will be worth it in the end.
Is Everything In Season?
How seasonal is your work? In some climates where air conditioners sit idle all winter while heat systems are running and vice-versa, you may have busy times at the first sign of a summer warm up or during the first cold snap of the winter season. In the southwest, air conditioning may bring in much higher revenues over a longer period than heating will during the brief winter season.
Be sure you have data that shows what the seasonal cycle of your business is so you can let the buyer know how to best manage cash flows.
Are there Customers for Life?
What does your client base look like? If you do a lot of commercial work, you probably have large customers who frequently ask you to bid on jobs and contract you for them. In some cases, they may even leave out the bidding process and just contract you directly.
Even in the residential HVAC industry, there are regular customers who call on you and your company whenever they need something. These regular customers are your bread and butter and are invaluable to show to your buyer. This not only shows your level of customer service and retention rates but the potential for future profitability.
Who Do You Compete Against?
Who is your primary competition in your area and how do you compare to them? What sets you apart? When you are selling your business, this is one of the things you want to emphasize to your buyer. They need to understand how and why you have built your business the way you have, and what it is that sets you apart from bigger companies and other local ones around you.
Ready to sell your HVAC business? The best advice is to hire a business broker. These professionals will help match you with the right buyer at the right time. They can help you ensure you have all the paperwork in order and your business is actually ready to sell. Need help or more information? Contact us at Rogerson Business Services today to find out how we can help you with selling an HVAC business in today’s market.