I Bought an HVAC Company

[T’Boo Ted Marshall 2731]

I may be slightly crazy, but I bought the assets/operations of a HVAC company based out of Mckinney.  Really good, honest reputation and has been in business over 7 years.  Always profitable and needed some good operational oversight and growth strategies.  One of which is acquisitions in the Dallas area. I've got about 3 that I've had some introductions with based on interest.

We are about 80% Res/20% Light Commercial.  

Transitioning over the operations will be the most time consuming exercise for the next 30 days, but the existing staff will be helpful.  

It's been a little over 3 years since I've been in small business ownership, so this has the fires stoked again.

I'd love to connect with Property Managers, others in the contracting space, CRE and good old residential folks looking for options and advice.  

 

 

[BearSchlong 8082]

Congratulations, that's not crazy at all.  I wish I'd gone into that business.

[fattyflattie 4639]

I've got a friend who got really close to doing the same, but ended up backing out.  Victoria area.   The guy that takes care of my system does well.  Good luck and seems like a good business.

[shakahorn 1645]

An HVAC company in Texas seems like a pretty good idea

Why did they sell?

[UTPhil2006 3801]

Cool  (get it?)

[TwiceHorn 31431]

That seems like a really good business.

I went to high school with two dudes whose families owned HVAC/mechanical companies and knew the scions of a third.  All very well-to-do.  The two I went to HS with are aggot engineers, appropriately.  And two of them Jewish of all things.

Wife has been office/business manager of yet another one that's kept two generations of people in pretty tall cotton.  And theirs is a kind of typical goofy-ass family operation that drives my wife batshit.

Edited January 6, 2021 by TwiceHorn

[Upgrayedd 5810]

Do you even know how to use a psychrometric chart?

[T’Boo Ted Marshall 2731]

20 minutes ago, shakahorn said:

An HVAC company in Texas seems like a pretty good idea

Why did they sell?

Younger owner that had reached the limit of his skill set and needed some outside help.  

[TwiceHorn 31431]

4 minutes ago, T’Boo Ted Marshall said:

Younger owner that had reached the limit of his skill set and needed some outside help.  

Is he still involved?  It seems important, in addition to having a group of decent technicians, to have someone that is kind of a natural engineer to sort of head things up from a technical standpoint.

Also, the head of company wife works for doesn't work for builders, even custom, says it's not worth the headaches.  And our builder says it's hard to find good contractors to do HVAC on custom homes.  I'm not sure what the ins and outs there are, maybe it's a business thing of being a subcontractor without the appropriate business skills.  But there's one contractor in North Dallas that seems to have something of a monopoly on that work.

Edited January 6, 2021 by TwiceHorn

[T’Boo Ted Marshall 2731]

9 minutes ago, TwiceHorn said:

Is he still involved?  It seems important, in addition to having a group of decent technicians, to have someone that is kind of a natural engineer to sort of head things up from a technical standpoint.

Also, the head of company wife works for doesn't work for builders, even custom, says it's not worth the headaches.  And our builder says it's hard to find good contractors to do HVAC on custom homes.  I'm not sure what the ins and outs there are, maybe it's a business thing of being a subcontractor without the appropriate business skills.  But there's one contractor in North Dallas that seems to have something of a monopoly on that work.

Yes, I let him roll a small piece of equity to stay on.  

New construction is dicey.  You've really got to be in the pockets of the builder and you aren't doing much service work for a few years given the warranties.  On the converse you do have easy built in customers that you can go back out to and let them know you are the contractor that installed the system.  I don't foresee us playing heavily in that space anytime soon.  

[deadshank 24652]

Which manufacturer's are you a dealer for?  

How are you to ensure that the master license holder stays onboard? What are your plans if he doesn't?

 

[BabaYaga 15286]

The margins are STUPID.....girl who use to work for me.  Her husband was a regional sales guy for an HVAC company.  They did the same.  No brick & mortar.  Very little overhead.  Can get units at cost.  They are going to do very, very well.

They have a single van/vehicle.  Her husband and brother are the trained labor.  Their mutual connections are bringing in business.  I wish I had done the same.  

[UTPhil2006 3801]

Okay Okay Okay I'll moonlight as an AC salesman for you for large commission and bonus structures

[T’Boo Ted Marshall 2731]

44 minutes ago, deadshank said:

Which manufacturer's are you a dealer for?  

How are you to ensure that the master license holder stays onboard? What are your plans if he doesn't?

 

Trane, Carrier, Bryant, Aaon, Lennox.  Most of the main players.

Some of the seller's value I tied to performance over the next 18 months.  I work in M&A and we've sold over a dozen HVAC's in the last 4-5 years.  I also learned quote a bit of the roll up strategy from PE firms that have done it.  If i need a GM/Tech or someone with a license, I can get one pretty easily.  I also had my attorney draw up a 60 day notice clause and if he leaves prior to that there is a monetary penalty.  

[Blotto 23484]

I'm curious, do you have experience in the HVAC industry or just running a business. I used to sell into the commercial side, and the differences in profitability was insane. Obviously the chances of fucking up residential estimates, major job slippage on residential projects is smaller, but I would see contractors doing to 50-100 million a year in revenue make less profit than companies with much smaller run rates. There is definitely a right way and a wrong way to run those businesses. 

[T’Boo Ted Marshall 2731]

I've owned a business prior and my work in M&A really opened my eyes to a lot.  I'm a good listener as well. My best skill set is putting the right people in the right place and holding them accountable.  

I have a current listing for a HVACR company that has multiple locations in Texas.  97% Commercial work.  They do about $8M per year in Gross.   I showed them they were winning bids, but losing at the same time.  They are less profitable than the HVAC I bought that does $2.5-$3M in gross on average so your point is exactly correct.  

[Onboard 2.0 9083]

5 hours ago, UTPhil2006 said:

Cool  (get it?)

Not that hot of an answer.....

[EuroHorn 3250]

Let me know if you need any help integrating acquisitions

[woohorn 1131]

How far south of McKinney? Dallas residential?

Know several olds who were with Levy n SONS for decades before Service Experts bought them and fucked it up. Hope you are able to keep existing customers better than they did. GL!

[T’Boo Ted Marshall 2731]

How far south of McKinney? Dallas residential?

Know several olds who were with Levy n SONS for decades before Service Experts bought them and fucked it up. Hope you are able to keep existing customers better than they did. GL!

We’ve gone to the HP and UP area plenty for both Residential and commercial work. What area are you curious about?

[woohorn 1131]

PH. Levy would checkup Winter/Summer and replace every 8-10 years.

[justhookit 4191]

11 hours ago, T’Boo Ted Marshall said:

I've owned a business prior and my work in M&A really opened my eyes to a lot.  I'm a good listener as well. My best skill set is putting the right people in the right place and holding them accountable.  

I have a current listing for a HVACR company that has multiple locations in Texas.  97% Commercial work.  They do about $8M per year in Gross.   I showed them they were winning bids, but losing at the same time.  They are less profitable than the HVAC I bought that does $2.5-$3M in gross on average so your point is exactly correct.  

Buy a couple of trailers for your workers and office and stick them in Aransas Pass or Ingleside.  Do work in Port Aransas. HVAC, plumbing, remodeling, whatever. Profit. These guys that are good down here are making a fortune because most of the trades and contractors are terrible.

[deadshank 24652]

3 hours ago, justhookit said:

Buy a couple of trailers for your workers and office and stick them in Aransas Pass or Ingleside.  Do work in Port Aransas. HVAC, plumbing, remodeling, whatever. Profit. These guys that are good down here are making a fortune because most of the trades and contractors are terrible.

And salt air environment is really bad on HVAC equipment.  

[Native Horn 3498]

I did the drywall at the McDonald's up in Las Colinas, small world.

Congrats T'Boo, sounds like you might have hit a home run #nojinx

[tx 3 putt 76859]

give it hell man 

[orange dream 1246]

Awesome. Good luck.  Post the name / number on here some time for those of us in the are who need service or are ever asked if we know a good AC company.

[T’Boo Ted Marshall 2731]

Awesome. Good luck.  Post the name / number on here some time for those of us in the are who need service or are ever asked if we know a good AC company.

As you wish.

https://taylormadeheatandair.com/

[deadshank 24652]

I wanna talk to the manager!!

[T’Boo Ted Marshall 2731]

I wanna talk to the manager!!

He’s down the hall to the left.

[Spaulding Smails 1552]

Congrats, man.  That's awesome.  You're gonna kill it.

Not sure if you can divulge, but I'd love to see the multipliers used for that calculation.  I just brought on a master electrician and I have a master plumber starting Feb 1.  Trying to figure out our strategy for HVAC to round out the MEP offering. 

[Spaulding Smails 1552]

On 1/6/2021 at 2:35 PM, deadshank said:

Which manufacturer's are you a dealer for?  

How are you to ensure that the master license holder stays onboard? What are your plans if he doesn't?

 

The manufacturer piece seems to be super critical for HVAC.  TONS of benefit to alignment with a vendor from a pricing and consistency standpoint.

I stewed over the licensing aspect for a long time and opted for a plan similar to @T’Boo Ted Marshall for my electrician and my plumber.  Though, I think HVAC licensed techs may be easier to find as field workers from what I've seen.  Ultimately it boils down to three things:

-Make sure they're a good fit

-Treat them well

-Have more than one

We're paying for continuing education for one of our journeymen electricians (including his masters test) simply so that we can have a second master just in case.  If you're not the license holder as the business owner, I think it's smart to have two if you need one from a licensing standpoint.

[T’Boo Ted Marshall 2731]

Congrats, man.  That's awesome.  You're gonna kill it.
Not sure if you can divulge, but I'd love to see the multipliers used for that calculation.  I just brought on a master electrician and I have a master plumber starting Feb 1.  Trying to figure out our strategy for HVAC to round out the MEP offering. 

The multipliers on the value of the company?

Where are your ops?

[jeevsie 3733]

Hat tip to you, sir.  Small business is the lifeblood of society.

[Spaulding Smails 1552]

On 1/14/2021 at 7:18 PM, T’Boo Ted Marshall said:

The multipliers on the value of the company?

Where are your ops?

Yes.  EBITDA multiple.  Curious what that is for you if you can share.  I am in Austin.  

[tx 3 putt 76859]

On 1/14/2021 at 7:18 PM, T’Boo Ted Marshall said:

The multipliers on the value of the company?

Where are your ops?

the call is coming from inside the house !!!!!

[Your Mom 4805]

And I thought my industry had a lot of acronyms. You people are speaking in tongues. 

[BigDHornfan 6545]

Hey T'Boo,  

Whenever I need your services, can I pay you in Bourbon?  

[T’Boo Ted Marshall 2731]

8 hours ago, BigDHornfan said:

Hey T'Boo,  

Whenever I need your services, can I pay you in Bourbon?  

not if it is Dickel

[TexasEd 8066]

On 1/6/2021 at 1:32 PM, T’Boo Ted Marshall said:

Yes, I let him roll a small piece of equity to stay on.  

New construction is dicey.  You've really got to be in the pockets of the builder and you aren't doing much service work for a few years given the warranties.  On the converse you do have easy built in customers that you can go back out to and let them know you are the contractor that installed the system.  I don't foresee us playing heavily in that space anytime soon.  

Stickers

On those new construction jobs you are in the house so you put your service number on everything.  Thermostats, air handlers, compressors, inside air filter doors.

 

[Blotto 23484]

@T’Boo Ted Marshall your operation strictly HVAC or do you dabble in the plumbing/mechanical side as well? Going to be a big demand for plumbing contractors coming up. 

Edited February 16, 2021 by Blotto

[T’Boo Ted Marshall 2731]

36 minutes ago, Blotto said:

@T’Boo Ted Marshall your operation strictly HVAC or do you dabble in the plumbing/mechanical side as well? Good be a big demand for plumbing contractors coming up. 

we have a Master Plumber but he is mainly Commercial.  We can handle most residential plumbing issues with our techs.  My guys are slammed right now.  Logged over 100 calls yesterday alone.  

[bluto 4912]

Congrats on your lotto ticket sir

[Incredulity 11643]

But it’s not a lotto ticket.  Crews get run into the ground, supply chain for parts gets fucked.  You spend the next 6 months dealing with pissed off customers and employees.  Been to this rodeo.

[Pato del Muerto 52484]

5 hours ago, T’Boo Ted Marshall said:

we have a Master Plumber but he is mainly Commercial.  We can handle most residential plumbing issues with our techs.  My guys are slammed right now.  Logged over 100 calls yesterday alone.  

Time to get some radio time advertising gas heater hvac systems that can be run off a small generator if power goes down.

[Pato del Muerto 52484]

16 minutes ago, Incredulity said:

But it’s not a lotto ticket.  Crews get run into the ground, supply chain for parts gets fucked.  You spend the next 6 months dealing with pissed off customers and employees.  Been to this rodeo.

But if it’s like most disasters like hurricanes, people will travel from all over to fill their pockets. Roofers from all over the country head to hurricane damaged areas looking for work. 
he should be able to take on contractors and handle the glut of business- he gets paid, contractors get paid, homeowners get their shit fixed faster.  Then when business dies back down to baseline, they go away. 
 

see also:  hookers to Super Bowl and nba all star game and such. 

Edited February 17, 2021 by Pato del Muerto

[Angry Gorilla 1766]

not if it is Dickel

What about peanut butter whiskey?

[T’Boo Ted Marshall 2731]

12 hours ago, Incredulity said:

But it’s not a lotto ticket.  Crews get run into the ground, supply chain for parts gets fucked.  You spend the next 6 months dealing with pissed off customers and employees.  Been to this rodeo.

Troof.  I'm trying my best to keep the guys happy during this time, but I'll need to look to hire soon.  We have a good opportunity with a regular workload of installing water softeners in the metroplex and might hire 2 just for that "division".  

[T’Boo Ted Marshall 2731]

insane time.  We can't keep up with the calls.  Almost all the same with busted pipes or leaking water heaters.  

Competitors are charging insane rates, which I think is wrong during this time.  I understand it, but personally just feel as thought it is wrong.  People are having a tough time right now to begin with, there is no need to gouge.  An example is a neighbor asked me to check with my guys for availability on a main line being frozen. Competitors charged $350+ just to show up.  That is nonsense.  I moved him up after a cancellation for our standard rate.  I'd rather have a bunch of fans than gouge people.    

[DefinitelyNotHollywoodColt 12301]

13 hours ago, T’Boo Ted Marshall said:

insane time.  We can't keep up with the calls.  Almost all the same with busted pipes or leaking water heaters.  

Competitors are charging insane rates, which I think is wrong during this time.  I understand it, but personally just feel as thought it is wrong.  People are having a tough time right now to begin with, there is no need to gouge.  An example is a neighbor asked me to check with my guys for availability on a main line being frozen. Competitors charged $350+ just to show up.  That is nonsense.  I moved him up after a cancellation for our standard rate.  I'd rather have a bunch of fans than gouge people.    

play the long-game...you'll take a ton of marketshare by simply being a decent human-being right now. the value of a life-long happy customer will be 10X what you could gouge them on right now.

your industry is full of a bunch of fucking morons. be smart, win.

[Buzzrock 14901]

Good luck. A buddy of mine did that in Atlanta and 20 years later sold it to an expanding multi-state firm for $12M. He owns the building which they are renting back from him. He’s making close to $1M a year on investment income now and he’s 51 years old.