Do not wait until you are at the closing table to know what inventory you are getting when buying a heating and air or plumbing company.
Buying a heating and air company? What is the inventory worth?More often than not, on the sale of a small to mid sized HVAC company, inventory is included in the sales price. This figure is usually an estimate provided by the seller to their broker at the time the listing was taken. Keep in mind, on an over priced listing or one that has not been promoted very well, may have been over a year ago.
In formulating a fair offer, a buyer should include that value into what their purchase price, or offer is. The problem is that is where most buyers stop.
Too many times inventory does not get discussed until the night before closing, or even worse, at the closing table.
Knowing what you are buying and what it is worth will help smooth out the transition, and more importantly cash flow.
When I personally purchased a heating and air company, the previous owner had a large commercial job he completed in the previous year, and had items that were left over, and this was included in his inventory value. They were a primarily residential company, that hardly ever did commercial work, much less the need for large amounts of dampers etc.. Had I not taken the five minutes to ask to see the inventory list, and personally inspect what was included I would have needed to buy supplies as soon as I took over ownership.
Obviously this could have made for a strained relationship if I took over the company and then saw what I was getting. But by letting the seller know I had no need for some of the items, he was able to get rid of them on his own, and lower the purchase price.
As I am sure you can imagine, every seller believes what they own is worth its weight in gold, and every buyer believes it should be free. But by addressing this item early in the process it can make buying or selling a heating and air company a positive experience for everyone involved.