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HOW TO VALUE A HVAC BUSINESS.pptx

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Michael Shea PA
Michael Shea PA

A brief overview on how HVAC companies are valued when they go to market for sale. Comps, KPI, and key drivers are included in this presentation

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www.tworld.com Private And Confidential | 1 W O R L D - C L A S S S E N I O R - L E V E L A T T E N T I O N D A T A - D R I V E N HOW DO YOU VALUE A HVAC COMPANY
www.tworld.com Private And Confidential | 2 Why Transworld? WORLD-CLASS | SENIOR-LEVEL ATTENTION | DATA-DRIVEN Established in 1979, we have a highly successful track-record of 40+ years having successfully completed 10,000+ transactions We leverage our proprietary data sources and advanced analytics capabilities to access deeper insights earlier, handle deal complexities, anticipate whats around the next curve, and effectively prepare for a win-win outcome and successful transition With 220+ offices across 40 states and 16 countries and 600+ deal-makers on the ground we have that ability to cast a very wide-net We are uniquely positioned to represent the best interest of owner-led / entrepreneurial businesses as our corporate culture is based on similar principles Our deal team has rich cross-industry, entrepreneurship, corporate finance, and private equity credentials having successfully advised in US $5B+ in aggregate deal value Our solid relationships with preeminent financial sponsors and strategic buyers both domestically and globally, allow us to maximize your potential of a timely and successful closing
www.tworld.com Private And Confidential | 3 KEY DRIVERS OF VALUE HVAC Benchmarks INDUSTRY RULES OF THUMB SERVICE STRONG SERVICE REVENUE BASE EMPLOYEE METRIC HEADCOUNT & $ CUSTOMERS NEW BUILD, CONSUMERS, TRUST INDUSTRY WHAT ARE THE TRENDS CONTRACTS / AGREEMENTS INCREASE VALUE RESIDENTIAL SERVICE & REPLACEMENT IS KEY PREVENTATIVE MAINTENANCE PROGRAMS DRIVE VALUE $200 TO $250K PER EMPLOYEE 5 TO 1 RATIO OF FIELD TO OFFICE PERSONNEL TRAINED SERVICE PERSONNEL & TECHNOLOGY TO TOUCH CUSTOMER AND ESTIMATE LIFE OF UNITS PROACTIVELY NEW CONSTRUCTION TEMPTING BUT MUST EGGS IN ONE BASKET VALUE WISE CONSUMERS TRUST ISSUE A LEGACY: USE SOCIAL TO EDUCATE, EMAIL LISTS TO REMIND OF MAINTENANCE NEEDS THEY CAN DO TRUST IS KEY FRANCHISING GROWING TO DUAL BLEND ONE SOURCE (DUNKIN/BASKIN MODEL) EXPLOSIVE HOUSING GROWTH GOOD FOR BIZ CHALLENGE OF STAFFING DUE TO LACK OF TRADE SCHOOL AND ENROLLMENT MILLENIALS ARE LESS LOYAL SO MUST CONNECT AND HAVE RETENTION PLAN 25%-40% Annual Sales Plus Inventory 2-3.5X SDE plus Inventory 3-4.5X EBIT 3-4X EBITDA 114,233 HVAC COMPANIES IN USA $500 -$1M avg size 50% New Construction 32% Maint & Service 11% Replacement 6% Refridgeration 30-40% COGS Occupancy 1-6% Payroll 19 to 25% Profits 5 to 15% 01 02 03 04
www.tworld.com Private And Confidential | 4 VALUE DRIVING YOUR HVAC FOR SALE Clean Books As always good books and records are vital to getting the highest and best price QB and Hire a CPA Revenue Sticky meaning repeat so agreements, contracts preventative maintenance contracts Financial and Service Software Not nice to have but must have The buyer is expecting it Its the 21st centurymake sure you have automation in CRM and Marketing as well Marketing Leverage dealer relatinships Educate and inform consumer continuously PM communications about flushing and maintenance reminders are valued and build trust 01 02 03 04
www.tworld.com Private And Confidential | 5 Data for HVAC OWNERS KEY STATS MULTIPLIERS 237 SOLD IN LAST 10 YEARS $1.4 MILLION AVERAGE GROSS SALES $708,000 AVERAGE SALES PRICE 3.7 AVG MULTIPLE / MEAN 1.97 SELLERS OVERPRICE AND SIT AVERAGE 5 EMPLOYEES SELLING WITH SBA AT 3X PRIVATE EQUITY TARGET AND VERTICAL INTEGRATION REAL AVERAGE SDE $267,000 MEAN SDE $181,000 RENT AS % OF SALES LESS THAN 1% AVEARGE DAY ON MARKET 267 70% OR 1 X SALES AS PRICE OF DEAL AT $750 IN SALES 1.5 X AT 750 TO 1MM 1.8 TO 2X AT 1 TO 1.5MM 2 TO 2.5 X AT 1.5 TO 2.5M 2.5 TO 3X
www.tworld.com Private And Confidential | 6 THANK YOU! MICHAEL SHEA P.A. CBI, BCI, CMAP PARTNER TRANSWORLD BUSINESS ADVISORS WWW.YOURFLORIDABUSINESSBROKER.COM MIKE@TWORLD.COM 321-287-0349

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HOW TO VALUE A HVAC BUSINESS.pptx

  • 1. www.tworld.com Private And Confidential | 1 W O R L D - C L A S S S E N I O R - L E V E L A T T E N T I O N D A T A - D R I V E N HOW DO YOU VALUE A HVAC COMPANY
  • 2. www.tworld.com Private And Confidential | 2 Why Transworld? WORLD-CLASS | SENIOR-LEVEL ATTENTION | DATA-DRIVEN Established in 1979, we have a highly successful track-record of 40+ years having successfully completed 10,000+ transactions We leverage our proprietary data sources and advanced analytics capabilities to access deeper insights earlier, handle deal complexities, anticipate whats around the next curve, and effectively prepare for a win-win outcome and successful transition With 220+ offices across 40 states and 16 countries and 600+ deal-makers on the ground we have that ability to cast a very wide-net We are uniquely positioned to represent the best interest of owner-led / entrepreneurial businesses as our corporate culture is based on similar principles Our deal team has rich cross-industry, entrepreneurship, corporate finance, and private equity credentials having successfully advised in US $5B+ in aggregate deal value Our solid relationships with preeminent financial sponsors and strategic buyers both domestically and globally, allow us to maximize your potential of a timely and successful closing
  • 3. www.tworld.com Private And Confidential | 3 KEY DRIVERS OF VALUE HVAC Benchmarks INDUSTRY RULES OF THUMB SERVICE STRONG SERVICE REVENUE BASE EMPLOYEE METRIC HEADCOUNT & $ CUSTOMERS NEW BUILD, CONSUMERS, TRUST INDUSTRY WHAT ARE THE TRENDS CONTRACTS / AGREEMENTS INCREASE VALUE RESIDENTIAL SERVICE & REPLACEMENT IS KEY PREVENTATIVE MAINTENANCE PROGRAMS DRIVE VALUE $200 TO $250K PER EMPLOYEE 5 TO 1 RATIO OF FIELD TO OFFICE PERSONNEL TRAINED SERVICE PERSONNEL & TECHNOLOGY TO TOUCH CUSTOMER AND ESTIMATE LIFE OF UNITS PROACTIVELY NEW CONSTRUCTION TEMPTING BUT MUST EGGS IN ONE BASKET VALUE WISE CONSUMERS TRUST ISSUE A LEGACY: USE SOCIAL TO EDUCATE, EMAIL LISTS TO REMIND OF MAINTENANCE NEEDS THEY CAN DO TRUST IS KEY FRANCHISING GROWING TO DUAL BLEND ONE SOURCE (DUNKIN/BASKIN MODEL) EXPLOSIVE HOUSING GROWTH GOOD FOR BIZ CHALLENGE OF STAFFING DUE TO LACK OF TRADE SCHOOL AND ENROLLMENT MILLENIALS ARE LESS LOYAL SO MUST CONNECT AND HAVE RETENTION PLAN 25%-40% Annual Sales Plus Inventory 2-3.5X SDE plus Inventory 3-4.5X EBIT 3-4X EBITDA 114,233 HVAC COMPANIES IN USA $500 -$1M avg size 50% New Construction 32% Maint & Service 11% Replacement 6% Refridgeration 30-40% COGS Occupancy 1-6% Payroll 19 to 25% Profits 5 to 15% 01 02 03 04
  • 4. www.tworld.com Private And Confidential | 4 VALUE DRIVING YOUR HVAC FOR SALE Clean Books As always good books and records are vital to getting the highest and best price QB and Hire a CPA Revenue Sticky meaning repeat so agreements, contracts preventative maintenance contracts Financial and Service Software Not nice to have but must have The buyer is expecting it Its the 21st centurymake sure you have automation in CRM and Marketing as well Marketing Leverage dealer relatinships Educate and inform consumer continuously PM communications about flushing and maintenance reminders are valued and build trust 01 02 03 04
  • 5. www.tworld.com Private And Confidential | 5 Data for HVAC OWNERS KEY STATS MULTIPLIERS 237 SOLD IN LAST 10 YEARS $1.4 MILLION AVERAGE GROSS SALES $708,000 AVERAGE SALES PRICE 3.7 AVG MULTIPLE / MEAN 1.97 SELLERS OVERPRICE AND SIT AVERAGE 5 EMPLOYEES SELLING WITH SBA AT 3X PRIVATE EQUITY TARGET AND VERTICAL INTEGRATION REAL AVERAGE SDE $267,000 MEAN SDE $181,000 RENT AS % OF SALES LESS THAN 1% AVEARGE DAY ON MARKET 267 70% OR 1 X SALES AS PRICE OF DEAL AT $750 IN SALES 1.5 X AT 750 TO 1MM 1.8 TO 2X AT 1 TO 1.5MM 2 TO 2.5 X AT 1.5 TO 2.5M 2.5 TO 3X
  • 6. www.tworld.com Private And Confidential | 6 THANK YOU! MICHAEL SHEA P.A. CBI, BCI, CMAP PARTNER TRANSWORLD BUSINESS ADVISORS WWW.YOURFLORIDABUSINESSBROKER.COM MIKE@TWORLD.COM 321-287-0349