I often get this question from small to mid-size company owners: why would a large company want to acquire my small local firm? A big company would be interested in your small business for several good reasons. Time, money, and talent are the most prominent.
Time
Large companies that want to expand into a new territory know it will take years to create a foothold. Growing a company from scratch is a long process, and they’ll be competing head-to-head with your already established brand and satisfied customer base. It would be quicker and more quickly profitable to acquire your company.
If the buyer is already in the industry, acquisition is a proven way to expand the business. They gain economies of scale through administrative and marketing consolidation. They may already have technology such as Customer Relationship Management systems (CRMs) in place that will make it easier to proactively meet customer needs.
Money
Many small HVAC companies have a loyal customer base and get the first call when a customer needs to purchase or repair a unit. Many, though, are family-owned and operated and already working at full capacity. An infusion of capital, energy, and strategy creates the potential for quick and profitable growth—growth that the current owner doesn’t have the ability or resources to pursue. Larger companies can invest in more marketing and sales systems and staff, which will generate a rapid return on investment.
Larger companies have buying power that smaller companies can’t command. This means they may be able to obtain equipment, parts, and other materials at lower prices, which can also provide a quick profitability boost.
They may have other trades associated with the business, such as plumbing or electrical services. Adding HVAC by adding an established company with a good reputation expands their product offerings and provides a new customer base for their existing services.
Talent
This is one of the most important reasons a large company would want to buy your business. They’re really interested in buying your workforce. As an owner, you know building an efficient, skilled, and dependable team takes a lot of effort and time. A new hire technician can take as much as four years to become licensed and certified.
Larger companies can compete on salaries, though, which may help attract and retain the best talent available. They can offer benefits, growth opportunities, and profit-sharing or matching investment programs that a smaller company can’t afford. They can afford to support a larger workforce, allowing them to grow the business and service more customers.
It’s also a great marketing benefit to tell customers that the branding on the trucks may be new, but the service staff that has taken great care of you for years will still be on the job.
I’ve said this before: Buyers are really looking for potential. They’re willing to take on a certain amount of risk because they think they can improve operations, use assets more efficiently, and grow the company’s revenues. They have a strategy in mind, and they’re seeking the right opportunity to make it happen.
In selling companies, just like selling a home, there’s a market for almost every size of firm. Every company is the right fit for some company’s expansion plans.
If I can help you determine if 2025 is your year to sell, a good first step is to get a confidential and complimentary opinion of value.
