Commercial & Multi Unit Residential HVAC

This business is under a Letter of Intent which expires May 1st.  It allows me to continue to market this for future back up.  If you click through and fill out the NDA, I will let you know if it falls through.  Jeff

The trailing 12 months earnings through December 31 2023 were 381K from 1.5M in revenues.  The company is on a June 30th Fiscal Year.   The 2022 fiscal year that ended June 30, 2023 had earnings of 331K from revenues of 1.4M.  

The sales price has been set at 835K which makes the sales price just under 2.2 times the earnings which is very low for a company with a 25% profit margin and over 85% in recurring revenue.  

  The buyer will get approximately 123K in hard assets made up of five outfitted vans, one 4WD Jeep Cherokee, and one 4WD pickup truck along with a lot of tools and equipment. All vehicles run.  He has 4 technicians which means that he has an extra van which will save the new owner on some capitalization during post closing growth. 

The company has all the work it can handle which means that all the new buyer needs to do is to hire more technicians to grow and build equity. The owner bought the business 4 years ago and spent the first two years converting it from a commercial HVAC company that did big projects as subs for general contractors to a service-oriented company mostly working with property management companies working on commercial and multi-unit residential buildings. This has tripled its profit margin and created a recurring source of steady work.    

The company currently has 5 full time employees including the owner.  The owner works as a part time technician as needed.  He also has two part time employees, one who works 10 hours a week as a “bookkeeper” and a part time salesperson who is used as needed.

They have a 4.8 star rating on Google which will help the new owner post-closing.  Online searches favor older websites with high ratings and they have both.  The internet is a very inexpensive source of new customers and growth where they can rely on their reputation and website. Most of their revenues are from current customers and referrals.  The owner believes that the heavy lifting is over and that it should be easy for a new owner to grow the company from how it is positioned now.      

A license is required to pull any mechanical permits; however, most service work usually does not require any permits. The seller is getting out of the business for family reasons, but willing to let the new owner use his licenses for a small monthly fee. It is recommended that the new owner obtains the basic local licenses within the first few years. For a Buyer with the right aptitude and/or experience, this business has the location, employees, equipment, reputation, and customers to grow significantly in the future. 

The current owner charges his customers at 130 dollars per hour for labor which is the same rate he has used for the last 1 ½ years and only 20% markup, which is low, on parts and equipment.  In other words, in a time of rising employee and material cost while all other similar companies have raised their rates, he hasn’t.  This is an easy way for the new owner to increase profits. 

The seller is asking for 835K plus inventory estimated to be 10K with 90% down at the closing.  This is priced at only 2.2 times the trailing 12 months earnings.  He will be keeping his cash and accounts receivables and will pay off all debt including the accounts payables so that the business transfers debt free.  It is an C Corp so this can be either a stock or an asset sale.   The 2021 and 2022 fiscal year tax returns still reflect the transition from a commercial construction company and therefore bank support will most likely require some business ownership experience or service industry experience.  Citywide, Celtic, Acclivity, Platinum, and Midwest Regional Banks have all looked at this and said that they would be willing to provide a loan to a well-qualified buyer. 

Location: South East Denver, CO metro area.  The office is 1,122 square feet with a garage and plenty of parking.  The lease only has one year left at 1,636 dollars per month which is a mostly gross lease.  He believes the landlord would be open to a longer-term lease with automatic extensions.