Listing ID: 76824
Business Overview
This well-established Anaheim Area heating, ventilation and air conditioning (HVAC) is a market leader in its category of commercial system design and installation for new build and replacement units. Over the past 25+ years, the company has aligned itself with Southern California’s major general contractors that service blue chip clients on majors builds that may include hotels, shopping centers, offices complexes, major retailers and more. The company has staff held C-20 Heat and Air and C-38 Refrigeration contractor’s licenses. It also has a separate layer of seasoned management staff, which should help alleviate common transition issues. The firm regularly completes 100 jobs per year for 30-40 contractors. Job size may vary but the average ticket is in the $100k range. Small retail ground-up engagements may be in the $30k – $50k range, while other jobs may exceed $500k.
Please note that the $900k property will not be sold without the business, though the $1.9 million business may potentially be sold without the property and the owner remaining the landlord. The facility would lease for $4.5k/mo on a long-term lease.
Financial
- Asking Price: $1,900,000
- Cash Flow: $561,279
- Gross Revenue: $4,489,716
- EBITDA: $561,279
- FF&E: N/A
- Inventory: $100,000
- Inventory Included: N/A
- Established: 1990
Detailed Information
- Property Owned or Leased:N/A
- Property Included:N/A
- Building Square Footage:N/A
- Lot Size:N/A
- Total Number of Employees:21
- Furniture, Fixtures and Equipment:N/A
The company currently has $1.4 ml in current jobs, work-in-progress or signed contracts. A buyer will walk into an ongoing pipeline that naturally varies over time. Cash, an estimated $500k in A/R and/or $500k in working capital and/or $1.8 ml. in retention is not included in the sale but can be purchased on a $1:$1 basis. Roughly $100k in inventory will be sold at cost at close.
Seller or Seller's designated representative will train for 4 weeks at 20 hour per week or as negotiated.
Retirement
This is a competitive industry where historical reputation and crew performance speak volumes and determine a firm’s credibility. As this is a well-established incumbent enterprise with no key crew members anticipated to transition out in a sale, this firm’s goodwill and lengthy top-tier general contractor client list and end user customer base provide it a distinct advantage that an industry entrant or transitioning residential or smaller commercial firm would find difficult to compete against when bidding.
The company may experience a tremendous uptick in business as result of COVID19 as schools and businesses upgrades their HVAC systems with high-efficiency particulate absorbing filters and high-efficiency particulate arrestance filters (HEPA). Additional opportunity exists in the residential market, whether in the multi-unit apartment, condominium or the single-family segment of the residential market. Unlike many HVAC companies, the company does not offer a service component that provides a recurring revenue stream. New management will likely wish to develop and implement one of these sought-after service components. The financials reflect an absentee run operation. Should a full-time working owner replace the general manager or should an existing operation’s management team absorb the functions into their existing infrastructure, new management may realize an additional $100k in annual savings.
Additional Info
The venture was established in 1990, making the business 32 years old.
The sale shall not include inventory valued at $100,000*, which ins't included in the asking price.
Why is the Current Owner Selling The Business?
There are all types of reasons why people decide to sell businesses. Nonetheless, the real reason and the one they tell you might be 2 completely different things. As an example, they may claim "I have too many other responsibilities" or "I am retiring". For many sellers, these factors are valid. But also, for some, these may simply be excuses to try to hide the reality of changing demographics, increased competitors, recent reduction in earnings, or a range of other reasons. This is why it is really important that you not rely absolutely on a vendor's word, yet rather, make use of the seller's response combined with your total due diligence. This will repaint an extra reasonable picture of the business's existing situation.
Existing Debts and Future Obligations
If the current business is in debt, which lots of businesses are, then you will certainly need to consider this when valuating/preparing your deal. Lots of operating businesses take out loans with the purpose of covering points like stock, payroll, accounts payable, so on and so forth. Remember that occasionally this can indicate that profit margins are too thin. Numerous companies fall under a revolving door of taking on debt as a way to pay back various other loans. Along with debts, there may additionally be future obligations to consider. There may be an outstanding lease on equipment or the structure where the business resides. The business may have existing agreements with vendors that must be satisfied or may result in charges if terminated early.
Understanding the Customer Base, Competition and Area Demographics
Exactly how do businesses in the area bring in brand-new clients? Many times, businesses have repeat customers, which create the core of their daily revenues. Specific variables such as new competitors sprouting up around the location, roadway construction, as well as personnel turnover can impact repeat customers as well as adversely impact future profits. One crucial thing to think about is the placement of the business. Is it in a very trafficked shopping center, or is it concealed from the highway? Obviously, the more people that see the business often, the higher the opportunity to build a returning client base. A final idea is the general location demographics. Is the business situated in a largely inhabited city, or is it situated on the edge of town? Just how might the local mean household earnings effect future earnings prospects?
