If you’re thinking of selling your HVAC business. There are lots of moving parts to manage at the same time. Before you move forward, consider price, promotion, and process. Affectionately called the 3P’s. Here’s why you should consider price, promotion, and process when selling an HVAC business.
During the HVAC sales process, every owner wants to get as much as possible for the business they spent years pouring energy into. But be careful not to make your HVAC business sale price too high. Many times owners will have a false idea of what their business is worth. Even if you work with a broker, they may not know what price the business should command if they don’t have industry experience. During the process of selling your HVAC business, if your price is too high, it will struggle to get the attention of buyers. Over time, you’ll get frustrated and lower the price. When that happens, new buyers will notice how long the business has been on the market and will see the new discounted price. They will assume something is wrong with the business, and won’t give it a second look. When it still doesn’t sell, you’ll be forced to lower the price again and continue the downward spiral.
Conversely, your HVAC business sale price should not be too low because it can be problematic. Sometimes owners will get approached by buyers randomly. My advice is to always test the open market and be confident you know what the business is worth — this way, your HVAC business sale price will be fair and reasonable. You and your family are owed fair compensation. An HVAC specific broker can look at what other comparable businesses have sold for in the industry. Together, you can come up with a justifiable sales price.
Doing business in this way helps protect your interests when a buyer does try and negotiate during the HVAC sales process. You can show them the collected facts and other documentation. The best-case scenario is to have multiple interested buyers. When a competitive bid situation arises, it’s possible the seller can earn a sales price above what was asked-and get to the closing table faster too.
Pricing the business is just one of your first steps when you think about how to start selling your HVAC business. Next, you have to advertise. When you are the owner, running an HVAC business sale promotion can be tricky to do on your own. You must keep the impending sale confidential from employees, customers, and competitors. If any of these parties find out too soon, the results can be catastrophic and destroy any chance of moving forward. I do recommend using a broker for this very reason.
By allowing yourself to take a step back in the HVAC sales process, the broker has the experience not only to advertise the business in the right places but also to list pertinent information without revealing your identity too soon. A broker will require the potential buyer to sign a non-disclosure agreement before you ever have a conversation with them. A good broker should also have vetted the buyer to make sure they have the financial resources to complete the transaction, making the process of selling your HVAC business much smoother.
This may be the most important of all the P’s. The HVAC sales process is a complicated transaction with multiple stakeholders. Getting any one of them wrong, or in the wrong order, can spell disaster for owners. Not only can it kill deals, but it can also unwind years of hard work. This is why we strongly urge sellers to get someone working on their behalf in the process of selling any HVAC business. Brokers only get paid when a deal closes, and it is always justified when they help you sell for a higher price or catch a deal-killing detail in the 11th hour. The fee is money well spent because they will handle details like:
- Assigning and negotiating lease terms with an inflexible landlord
- Knowing a banker that can get your buyer approved quickly
- Scheduling a closing attorney that specializes in small business transactions
- Transferring intellectual property
- Separating business from personal expenses.
- Loan transfers
These are just a few of the hundred or so details that WILL come up. It’s always best to leave the details of an HVAC sales process to the professionals and concentrate on keeping revenues high while they work through the 30-90- day process.
For more information on what you need to know on how to start selling your HVAC business, visit BusinessModificationGroup.com. We have an extensive collection of educational articles and videos that get you thinking strategically.
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.)