Your chest is getting heavy, and your stress level rises daily. You know you’re ready to sell your HVAC business, but you have no idea where to start. Whenever you think about it, you want to curl in a ball and deal with it later.
We get it. Selling a business is a big deal. It can be scary, overwhelming, and confusing. That’s why an HVAC business broker can be your saving grace while selling your HVAC business.
They can take the stress off your shoulders and aid you in valuing and marketing your business. Since they work in the HVAC industry, they have a plethora of contacts that could have leads on a potential buyer.
If you plan to sell your HVAC business, getting professional help to ensure you get a fair price for your company will be well worth it. But how the heck do you find a trusted HVAC broker?
What is an HVAC Business Broker?
Let’s back up a bit. This may be the first time you’ve heard of an HVAC broker; They are a professional who helps owners like you sell their business. They have experience creating business valuations and marketing HVAC companies to interested buyers. The cherry on top is their vast network of contacts in the HVAC industry, which is highly beneficial when finding that perfect buyer.
Why Hiring a Broker is Worth It
The benefits of hiring an HVAC broker are that they’ll:
- Tell you what your business is worth.
- Work to get you top dollar for your company.
- Save you considerable time and stress by handling paperwork and other tedious moving pieces.
- Provide expertise, knowledge, and guidance from start to finish.
- Use their expertise in negotiations, ensuring the best price possible.
- Take care of all the marketing.
The Process of Finding a Buyer
When you hire a reputable and trusted broker, they will get to work on marketing your company to their vast circle of contacts in the industry. This might include private equity firms, other brokers, or strategic buyers.
Choosing to use a broker means they should keep your listing confidential. Make sure you talk to them about their marketing strategy. Business brokers who have been in the business for a long time have all their resources and strategies at their fingertips. Not only will they find you a buyer, but they’ll find that perfect buyer that feels right for you.
The Cost of a Business Broker
Let’s talk money because we know you’re thinking, “That all sounds great, but what will it cost me?”
Costs can vary from broker to broker, but fees usually range from 4-10% of the sale price, considering how large the transaction is and the complexity of it.
Small, more straightforward transactions will have fees on the lower end of the spectrum, and large, more complex transactions will have fees on the higher end.
Legitimate, professional brokers will be upfront about costs, so feel free to ask all the questions you have. Aside from their commission-based fee, HVAC brokers sometimes charge upfront marketing fees for marketing materials and ads. Knowledge is power, so ask questions and make sure you know what the fees entail.
Like realtors who handle the negotiations of selling your home, HVAC brokers have experience in negotiating in selling your business. This is crucial in getting you the best price possible.
They are also well-versed in the dealings of other complicated deal terms such as:
● Earn-Out Provisions
An earn-out agreement is a term where the buyer pays a lower purchase price upfront and pays the remainder of the cost over a period based on the performance of the business.
● Non-Compete Clauses
A non-compete clause is a contract that prohibits the seller from competing with or poaching clients from the buyer for a certain amount of time after the sale.
● Purchase Price Adjustments
A purchase price adjustment is a contract that allows the buyer to adjust the purchase price of the business based on specific conditions being met, such as hitting financial goals.
● Sell-Side Due Diligence
Due diligence is the process of investigating a potential business acquisition. As part of sell-side due diligence, the buyer usually requests information about the HVAC business, including financial statements, tax returns, and contracts. The seller is responsible for providing the buyer with this information.
● Financial Due Diligence
Financial due diligence entails the investigation of the financial health of a potential business acquisition. This process usually includes reviewing financial statements, tax returns, and contracts.
Financial due diligence helps bring awareness to the buyer about any financial risks associated with the purchase.
● Operational Due Diligence
Operational due diligence is a process that entails investigating the operational risks of a potential business acquisition.
In this case, the buyer can review the company’s organizational structure, processes, and contracts to ensure they know of any operational risks associated with the purchase.
● Tax Due Diligence
Tax due diligence is investigating the tax risks of a potential business acquisition. This process will include reviewing the company’s tax returns and contracts.
The Importance of Hiring a Broker Specializing in HVAC Business
Knowing that not all brokers are created equal is essential when hiring a broker. Some brokers specialize in an industry, while others are general business brokers.
Stick with an HVAC business broker. They are professionals in specifically selling HVAC businesses, and that experience is what you need.
When shopping around for the perfect HVAC broker, don’t be afraid to ask for references and look up their reviews. An efficient, professional, and experienced broker will have no problem providing you with a list of satisfied customers.
A good broker will help you feel at ease after a conversation with them. They’ll have a clear pulse on the HVAC industry and understand the value of your business, the selling process, and the tax implications that come with it. With an exceptional broker at your side, you’ll be able to get top dollar and walk away with no regrets.