Five reasons why mergers can be a good strategy in the HVAC industry? The HVAC business boost market is already very big, with a value of $25.6 billion in the United States alone. It makes sense that HVAC businesses would be busy because nearly every home and commercial property in the country has a heating system and air conditioning, which is becoming an essential service as well. The growth won’t stop at its current numbers. Estimates suggest the HVAC services market could grow to $35.6 billion by 2030. Other estimates say that HVAC companies could experience a compound growth rate of 9.7% between 2019 and 2025, so there’s money to be made if you handle your business the right way. And that’s just for HVAC services. The HVAC systems market is valued at $15.16 billion as of 2020 and could experience a compound annual growth rate of 6% between 2021 and 2028.
You can also capitalize on this growth by expanding your business in your local area by acquiring another company or merging with it. There is risk in any M&A agreement, but the HVAC industry shows no signs of slowing down because there will always be demand for these services. That makes it one of the safer industries for M&A to work out well for both sides. At the same time, not all mergers and acquisitions are the same, so doing your due diligence before signing any transaction is essential.
If you want a successful M&A deal, you should always work with the right team. Sometimes business owners think they can do it alone and end up making mistakes along the way. Professional deal makers can create the exact leverage you need to reach a successful deal. It is in your interest to have a deal maker by your side as the other side will also have a team of professionals. As Mordecai Gal, operations director at AccessHeat Inc, puts it “Your business should always have proper financial records, especially when you want to exit. It is important that you understand working capital, as it will impact the deal. Have a thorough understanding of how things flow in several accounting statements, such as a profit and loss. You should also have a good idea of your balance sheet when walking into an M&A deal.”
Thinking of putting your HVAC business up for sale? After spending years building your business, you are finally ready to reap the reward of all your hard work. You put in countless hours and the time has come to move on. Your HVAC business can be a very valuable asset if you position it properly before listing it. When selling your HVAC company, you want to get the best market value for your asset. You want to make the best deal and maximize your investment.
Evaluate the strength of the existing team, starting by the leadership, all the way to field execution team. You can assess the team by reviewing their background, experience, performance reviews, tenure in the company, and customer feedback. Ultimately, this is perhaps the most critical element of the company, especially an HVAC company since its the team the one that drives all sales and execution. An important consideration from the team is their tenure and time to retirement. Unfortunately, the HVAC industry has experienced a shortage of labor for some time, which makes it particularly important to understand both time-to-retirement as well as talent replacement initiatives.
For a seller, it makes sense to test the market now because the economy is opening up and there is less hesitancy in the marketplace. Many business owners who were planning to sell last year might have decided to wait. After all, the market was highly unpredictable in 2020, and it scared both buyers and sellers into putting M&A off to see how things played out. With the economy and health situation trying to return to normal and valuations holding up, much of this hesitancy is evaporating. That has created a situation where there’s motivation to get these deals done in a hurry. Business owners who ended up holding on to their companies for an extra year could be looking for a quick out now that they know they’ll be getting fair value.
The HVAC industry is a pillar in the construction field. Being one of the most profitable businesses, small family-owned companies have flourished in this segment for many generations. Like other viable industries, it is widely understood that there are many moving parts that need to be always operating efficiently in order to keep success at the forefront. Due to the multi-faceted nature of this business class, HVAC companies have evolved into an ideal candidate set to reap the benefits of consolidation and https://www.access-heat.com/ are experts in this field. Generational handovers without proper succession plans and lack of a full C-Suite of executives have been the main drivers of the numerous recent mergers and acquisitions. To the benefit of the younger generation once set to inherit these businesses, they are now left with the freedom to pursue higher education and their own personal career fulfillment paths. They have had the burden of taking over the family business removed from their conscience.