The question of who is going to buy your business is not typically on the mind of the business owner about to list their business, but it can be just as important as the cash for the sale itself. 

When you spend 50+ hours per week building a business and making nearly every decision in the early years, you can’t help but develop an emotional connection. Somewhere along the way, customers and employees become like family. Building your business is likely your biggest professional accomplishment and putting it in the hands of an ill-equipped new business owner is a thought that would make most sellers cringe. Nobody wants their legacy destroyed.  

Buyers Looking for HVAC Business Opportunities

In making sure the “Who” is a good fit, I advise taking it slow. While most brokers will avoid the seller and buyer meeting, I encourage it.  The fact is, buying and selling a business is a life-changing decision that should never be taken lightly. It’s in the interest of both parties to make a good fit because a productive working relationship is going to be critical for a successful ownership transition.  The buyer will have questions, and the seller wants the business to continue.  

Who are the potential buyers?

Employee or Family

The most logical and seamless buyer may be someone you know very well. It could be a key employee or a family member. These can be great matches because they likely know the business well and can continue with a limited learning curve. It’s my advice that you still use a business broker to handle the transaction, but if the broker doesn’t have to spend money marketing the business and finding a buyer, commission may be reduced. 

The downside to selling the business to a family member or employee is that they may have a difficult time coming up with the cash to do the deal. Thankfully some banks have loan departments that specialize in cases like these. Generally speaking, they look favorably on buyers that are on the ”inside” because there is a perceived less chance of business failure. 

HVAC Business Competitors

Selling to a competitor can sometimes make the seller nervous because, in the due diligence process, sensitive details and financial records must be shared. Confidentiality is protected through non-disclosure agreements (NDA), but there is no guarantee that the buyer won’t back out of the deal. This is where a quality business broker can vet the buyer and make sure their intentions are pure. A broker will verify they, in fact, have the intention and capability of buying the business. 

As in any industry, there are good and bad actors. I always ask if there is someone you would NOT consider selling to. 

Of course, business is cyclical, and as one business owner may be approaching retirement and slowing down, there is another in growth mode trying to build their empire. I speak to buyers every day that want to expand their product service line or do business in another area. They are actively looking for acquisitions. In a perfect world, we have more than one potential buyer competing for the business. These are the scenarios that fetch the biggest sales prices. 

Buyers Looking for Businesses

General Public

When considering someone outside the industry, try to look for financially secure individual buyers. Not only should they be able to purchase the HVAC business but also manage it. People in this HVAC buying group should have strong leadership, marketing, and sales skills.

Given that their interests align with HVAC businesses, they are more likely to place a high value on it.

Buyers looking for HVAC businesses:

  • are not looking to change a business drastically
  • are generally not interested in relocating HVAC businesses
  • have strong business management skills to help it grow further 
  • are active in day-to-day operations

These are the HVAC business opportunities you can leverage while selling to the public. You may face certain challenges while working with this HVAC buying group.

Some of them include:

  • The in-experience of potential buyers (but strong management skills may allow a learning curve)
  • Access to fewer financing and deal options

HVAC Private Equity

Residential HVAC private equity or financial buyers are focused on maximizing their returns for their investors. They have strong financial capabilities and impressive work backgrounds.

Listed below are some benefits of residential HVAC private equity:

  • More financing options owing to availability of funds and higher net worth
  • Minimal culture change in the HVAC business

These are the potential challenges of HVAC private equity:

  • The ownership span is is shorter at 5-10 years
  • Seller’s exit plans may clash with the desire to keep the existing management team in place

In each group, buyers looking for businesses have their advantages and drawbacks. Therefore, opting for HVAC brokers who can screen each candidate is an excellent choice.