Just like there is a summer busy season for the HVAC business, there is also a season to sell your 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 company’s worth
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.
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. Not only does it help with future planning, but it also helps you make a decision on timing. Do you need to wait until next season to sell for a higher multiple? Or is now your ideal window? 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.
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. Removing yourself as much as possible from day to day operations brings enormous value to an HVAC business.
Buyers are looking for an adequate number of well-trained people. 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.
Keep clean books
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. Do what you can to maximize showing a profit. This is your last opportunity before the fall.
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.”
About Patrick Lange:
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.)