There is a Season to Sell Your HVAC Business
If you’re thinking you may want to sell your HVAC business this fall, it’s time to start your planning now. The summertime is your last chance to tune your business for maximum value. Here’s what to do.
Get an Idea of your HVAC Company’s Worth
Businesses are large assets that can grow three or more times in their original value. It’s always good practice to know what your largest asset is worth, so bring in a professional that has experience selling HVAC businesses and get their opinion. An experienced HVAC specific business broker can tell you what is happening with the market and the demand for your business. These professionals sell businesses that have your exact products and services.
Getting an opinion of value allows you to get your mind wrapped around how much money you will exit with and what your quality of life will be moving forward. An appraisal of your business is beneficial today and for future use. Not only does it help with future planning, but it also helps you make a decision on timing. Here are some basic questions and HVAC sales tips to consider:
Do you need to wait until next season to sell for a higher multiple?
Is now your ideal window?
What are the immediate and long-term benefits?
Why would selling be a bad idea at the moment?
Meet with a broker now, so you can be among the first businesses to sell in the upcoming “buying season.”
Limit large capital expenditures
I suggest running conservatively if you expect to sell your business soon. That means if you need a particular piece of equipment to continue the efficient operation of the business, go ahead and buy it, but see if there is a used equivalent for sale. If you just want to buy that shiny new truck because you deserve it, you may want to hold off. Saddling a company with debt can turn off a buyer and negatively impact your profitability. Furthermore, the debt is not transferred to the buyer, so it’s not like you are getting a free vehicle. Ask your HVAC business broker for a detailed explanation about how equipment is treated in an HVAC sale.
Start building brand reputation
Your growth is the key to selling your business fast. Remain focused on growth during the summer so that your agency is more attractive and fit in the fall. It can be tough to build a business in the lean spring and fall months due to limited cash flow. However, in the summer, you have the resources you need to stretch to bring on that new salesperson, general manager, or technician. Look to make hires that take tasks away from you. Above all, find professionals who can make improvements to your business upon hiring them.
Removing yourself as much as possible from day to day operations brings enormous value to an HVAC business. This doesn’t mean that you’re no longer occupied with the fundamentals of your company. Buyers are looking for an adequate number of well-trained people. Having a better hiring strategy also makes things easier on your final buyer and their team. Better hiring enables you to fill the voids you personally missed as a business owner.
You’ll be surprised at how often HVAC companies are being sought after. Don’t miss sales opportunities because leads are coming in faster than you can respond. Selling performance maintenance agreements in the summer will help you carry the new staff salary overhead in the fall. Should you fail to find a buyer, the new team you have can maintain itself regardless.
Keep clean books
Now is the time to clean up or rebalance your books, including your balance sheets. Your accounting is your financial scorecard. It tells a story of the health and makeup of your business. Properly accounting for cash and only running real business expenses through your business will avoid buyers asking questions that hurt you in the due diligence process of selling. None of us can say we’re perfect, but keep books in a way that causes no confusion. Do what you can to maximize showing a profit. This is your last opportunity before the fall.
Improve Your Business Before the Fall
Get it in your mind to improve; until a buyer makes the final decision, you have to maintain your business as if it’s the biggest market competitor. Look for ways to redo the methods and processes that you know can be better. Work to keep your workers happy, and set new goals for them to focus on. Everything you do to clean things up now benefits you later on.
Lastly, understand that demand is high for good HVAC companies. Frequently, this time of year we have more buyers than sellers. We maintain a database of these buyers and one may be in your area now. Use this summer as the time to tune up and leverage all your hard work. As the old saying goes, “You never get a second chance to make a first impression.”
Patrick Lange is an experienced HVAC specific business broker with Business Modification Group based in Horseshoe Beach, Florida. He has a unique background in financial planning and has even owned an HVAC business himself. This makes him well suited to working with some of the most successful HVAC business owners in the country. Specializing in companies with 1-10 million dollars in revenue, he maintains a network of buyers and sellers in the industry. He has sold more HVAC businesses than any other broker in the United States over the last 12 months and is currently the Vice President of the Business Brokers of Florida (North Florida District.)