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I Bought an HVAC Company


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McKinney air conditioning story.  Put the house up for sale in 2018. July  open house scheduled, and high temp that day in McKinney was 107.  The old unit held up very well.  I set the temp at 76, and when I arrived back at home the temp showed 78.  That old outside unit was the bomb! Original outside unit from 2001. Inside unit was from about 2008 or so.  

 

 

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  • 3 weeks later...
On 1/6/2021 at 12:33 PM, T’Boo Ted Marshall said:

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.  

 

 

4 months in and summer coming on.  
Give us an update.  

What have you learned that you didn’t know?  Are your master license holders still happy and with you?  What’s the biggest positive surprise and the biggest negative surprise?  How close to 100% accurate is the book of business, as presented to you?

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4 months in and summer coming on.  
Give us an update.  
What have you learned that you didn’t know?  Are your master license holders still happy and with you?  What’s the biggest positive surprise and the biggest negative surprise?  How close to 100% accurate is the book of business, as presented to you?

Oh boy where to start.

It’s going okay but needs to get better from a sales standpoint. The seller is not pulling his weight and I’m facing some really tough compensation decisions with him. I need to insulate the business from him.

I’m basically finishing out a house that was down to the studs. I’ve had to create org charts, define job duties, create workflows for a group that has never really had to deal with any of that. Reframing their mindset that not all jobs are good, profitable jobs. Be on time, don’t be a slob, stop complaining and get shit done or I will find someone who will.

The book is fine. We lose very few existing clients they just weren’t marketing to them well.

Supplies on higher end variable units have been a real issue. We have clients that have been waiting since mid April for the condensers to arrive.

I could acquire a nice plumbing company right now but I think it is a bit too early for plumbing. I have looked at 2-3 HVAC to add but they want too much and don’t understand how valuations work. My M&A background helps a lot there.

If I had the backing I could probably acquire enough to have $3m+ in EBITDA by the end of ‘21 and have a very good geographical presence in NE and East of Dallas.

Lost a big job on a church last week due to some shenanigans from the GC we actually got on the project.

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Thanks for the update.  

How many employees do you have?

Will you stay with both direct-to-owner retail sales for single-family residence work and continue on with bid work to GCs at the same time?   I would think the profit margins are better for the former.  

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Thanks for the update.  
How many employees do you have?
Will you stay with both direct-to-owner retail sales for single-family residence work and continue on with bid work to GCs at the same time?   I would think the profit margins are better for the former.  

7 total on W2.

Resi is our main bread and butter but we will do some commercial work as it pertains to maintenance and retrofits. For example we have a CPMA on a office building that now needs full replacement on all units. That will be about $250k worth of work. I’ll bid on some GC work if they are awarded the bid and we know them well. Don’t have time for it otherwise.

The church was just a raw deal. Pastor isn’t happy we weren’t awarded the bid but he didn’t stress enough to the 3rd party (Not GC) managing the project we were to be given last look/awarded and the PM just used his group and got a kickback I’m sure.
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On 5/8/2021 at 7:29 AM, Pato del Muerto said:

I would imagine working for a church to be a headache.  Did they want everything for cost or even free because Jesus?

You would be imagining wrong  per my experiences.  I've done work for churches and have had great success in my dealings with them.  Most were very good stewards of the money and there were no shenanigans.

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2 hours ago, deadshank said:

You would be imagining wrong  per my experiences.  I've done work for churches and have had great success in my dealings with them.  Most were very good stewards of the money and there were no shenanigans.

When I was in grading, we did a few LDS churches, and we were often the only sub that billed for the work.  

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@T’Boo Ted Marshall, I'm glad this thread popped back up.  I'd been wondering about you too.  Sounds like you're doing all the right things to set a solid foundation.  I'm also intrigued about your thoughts around outside investment.  I'm at a crossroads right now regarding that exact concept.  

On our side, I finally landed my HVAC master with an A license.  He starts next Monday.  Rounded out the MEP.  I may hit you up offline to talk shop regarding a few things.  I'm expecting this to be the 800-lb gorilla of our service arm, and I want to be prepared as we get him up to speed.

We're kind of facing the opposite issues that you noted.  I'm building this from the ground up, so we have NO processes in place.  We've bumped our head a few times on the electrical side after a really solid start, and we've experienced higher than anticipated turnover there.  The Sparkies have proven to be a different breed.  But, plumbing has been solid.  We were obviously bolstered by the "snowpocalypse" which essentially allowed us to self-fund our capital investments for that division.  I've since hired two more master plumbers, and we're booking 3-4 weeks out.  I've been skeptical of what I had to pay to get them on-board, but they've both delivered in spades so far.  I'm of the mindset that, since I'm not a license holder, I pretty much need to have two license holders for each trade at all times.  I can't afford to have someone get bent out of shape and jump ship with their license in tow without a plan B.  

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21 hours ago, Spaulding Smails said:

@T’Boo Ted Marshall, I'm glad this thread popped back up.  I'd been wondering about you too.  Sounds like you're doing all the right things to set a solid foundation.  I'm also intrigued about your thoughts around outside investment.  I'm at a crossroads right now regarding that exact concept.  

On our side, I finally landed my HVAC master with an A license.  He starts next Monday.  Rounded out the MEP.  I may hit you up offline to talk shop regarding a few things.  I'm expecting this to be the 800-lb gorilla of our service arm, and I want to be prepared as we get him up to speed.

We're kind of facing the opposite issues that you noted.  I'm building this from the ground up, so we have NO processes in place.  We've bumped our head a few times on the electrical side after a really solid start, and we've experienced higher than anticipated turnover there.  The Sparkies have proven to be a different breed.  But, plumbing has been solid.  We were obviously bolstered by the "snowpocalypse" which essentially allowed us to self-fund our capital investments for that division.  I've since hired two more master plumbers, and we're booking 3-4 weeks out.  I've been skeptical of what I had to pay to get them on-board, but they've both delivered in spades so far.  I'm of the mindset that, since I'm not a license holder, I pretty much need to have two license holders for each trade at all times.  I can't afford to have someone get bent out of shape and jump ship with their license in tow without a plan B.  

Happy to talk anytime.  

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7 hours ago, deadshank said:

@T’Boo Ted Marshall which equipment brand is selling the most, which has the best sales incentive plan for you and which brand do you think is the best in overall parts / assembly / functioning as designed / warranty?  

When I bought the operations they were a Trane Premier Dealer.  I did not want to rock the boat in transition so I did not seek alternatives.  However, we sell a lot of variable speed higher end units and there are really only 2 players there being Trane and Lennox.  Trane is universally recognized by most patrons and is a good product.  Aside from their plant in Tyler shutting down due to the roof collapsing during Snowpocalypse and killing 18 and 20 SEER unit supplies, they have been pretty good to work with.  

Older Nexia stats have been an issue but those were installed in 2018 and 2019.  Most have phased out.  

We have sold some Lennox when a customer insisted on it, but almost exclusively Trane on the Resi side.  

Only real bone I have to pick is the labor reimbursement they give us on warranty work.  The rates are fine, but the time allotted sucks.  

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  • 1 month later...
On 5/12/2021 at 2:11 PM, T’Boo Ted Marshall said:

When I bought the operations they were a Trane Premier Dealer.  I did not want to rock the boat in transition so I did not seek alternatives.  However, we sell a lot of variable speed higher end units and there are really only 2 players there being Trane and Lennox.  Trane is universally recognized by most patrons and is a good product.  Aside from their plant in Tyler shutting down due to the roof collapsing during Snowpocalypse and killing 18 and 20 SEER unit supplies, they have been pretty good to work with.  

Older Nexia stats have been an issue but those were installed in 2018 and 2019.  Most have phased out.  

We have sold some Lennox when a customer insisted on it, but almost exclusively Trane on the Resi side.  

Only real bone I have to pick is the labor reimbursement they give us on warranty work.  The rates are fine, but the time allotted sucks.  

Just ran across this thread. Rarely come to this board. Had no idea you were doing this. Let's catch up over lunch or a beer soon!

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T'Boo, are you having trouble getting HVAC units?   I've been without air conditioning on the 2nd floor of my house now for 2 weeks because of chips made in China.   thanks  
 

Hell yes. It’s costing me sales.
It’s not only chips but other materials and the labor to do them.

What brand equipment are you waiting on?
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  • 1 month later...
Posted (edited)

Seemed like this might be the thread with the people that could answer this. 
 

I have to replace a window unit on a duplex. It’s going to be $500 for a replacement with heating and cooling (and I’ll probably be paying $100 for the handymen to pick it up and set it in place). I’ve looked around, and the mini splits are now pretty cheap and pre charged if I want to do it myself (I don’t, and don’t have e the time). I found and hvac tech that will sell an aureus 1 ton (110v) and install for $700.  

I had an AC system installed on a 4 bedroom for about $11k 2 years ago (no duct work or anything as a starting point).  6 mini splits installed would only have been 4200.  

Are we at the point where as long as you don’t mind the air handler, mini splits are more cost effective on houses that don’t have any pre existing ac or even new builds?  I know there are the recessed handlers if you are worried about the look, but I don’t know how they compare on cost and install. 

Edited by UT_OB1
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8 hours ago, UT_OB1 said:

Seemed like this might be the thread with the people that could answer this. 
 

I have to replace a window unit on a duplex. It’s going to be $500 for a replacement with heating and cooling (and I’ll probably be paying $100 for the handymen to pick it up and set it in place). I’ve looked around, and the mini splits are now pretty cheap and pre charged if I want to do it myself (I don’t, and don’t have e the time). I found and hvac tech that will sell an aureus 1 ton (110v) and install for $700.  

I had an AC system installed on a 4 bedroom for about $11k 2 years ago (no duct work or anything as a starting point).  6 mini splits installed would only have been 4200.  

Are we at the point where as long as you don’t mind the air handler, mini splits are more cost effective on houses that don’t have any pre existing ac or even new builds?  I know there are the recessed handlers if you are worried about the look, but I don’t know how they compare on cost and install. 

You got a quote for 6 mini splits INSTALLED for $4200?  Brand?

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Posted (edited)
On 5/12/2021 at 2:11 PM, T’Boo Ted Marshall said:

When I bought the operations they were a Trane Premier Dealer.  I did not want to rock the boat in transition so I did not seek alternatives.  However, we sell a lot of variable speed higher end units and there are really only 2 players there being Trane and Lennox.  Trane is universally recognized by most patrons and is a good product.  Aside from their plant in Tyler shutting down due to the roof collapsing during Snowpocalypse and killing 18 and 20 SEER unit supplies, they have been pretty good to work with.  

Older Nexia stats have been an issue but those were installed in 2018 and 2019.  Most have phased out.  

We have sold some Lennox when a customer insisted on it, but almost exclusively Trane on the Resi side.  

Only real bone I have to pick is the labor reimbursement they give us on warranty work.  The rates are fine, but the time allotted sucks.  

Also want to say this is a really interesting thread - thanks for sharing your experiences.

A question about the above: We had to replace our interior unit last year - it was a Carrier that was only 8 years old but the blower died. The HVAC guys we use (who are honest and have been great to work with) told me that I could get a Payne unit for a lower cost, and that it’s essentially the same product (since it’s part of Carrier corporate family) so it would fit our setup with fewer modifications - they just have fewer bells and whistles than the higher-end Carrier units.  He mentioned that the Paynes he had were the older non-variable speed types so there was less that could break down.  Since you mentioned variable speed above: Is there better profit margin in selling those, and are they indeed more problematic? I’m curious as to the benefits of them. Thanks. 

Edited by sasquatch69
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21 minutes ago, sasquatch69 said:

Also want to say this is a really interesting thread - thanks for sharing your experiences.

A question about the above: We had to replace our interior unit last year - it was a Carrier that was only 8 years old but the blower died. The HVAC guys we use (who are honest and have been great to work with) told me that I could get a Payne unit for a lower cost, and that it’s essentially the same product (since it’s part of Carrier corporate family) so it would fit our setup with fewer modifications - they just have fewer bells and whistles than the higher-end Carrier units.  He mentioned that the Paynes he had were the older non-variable speed types so there was less that could break down.  Since you mentioned variable speed above: Is there better profit margin in selling those, and are they indeed more problematic? I’m curious as to the benefits of them. Thanks. 

I can’t speak to the AC units, but if the only extra equipment is the vfd, those should last a while with no issues. We have a very old system (21 years) and no vfd, but everyone I know that has upgraded to a system with one loves it.  And in my head it makes sense that they should be better and more cost effective. 

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22 minutes ago, UT_OB1 said:

I got a quote for 1 installed at 700, yes. Brand is Aurus. 

This quote includes everything?  Wall unit, compressor, mounting bracket, copper line, flaring copper line, electrical whip and cut off and all labor.  
 

That seems awful light on price.  

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On 8/15/2021 at 9:22 AM, deadshank said:

This quote includes everything?  Wall unit, compressor, mounting bracket, copper line, flaring copper line, electrical whip and cut off and all labor.  
 

That seems awful light on price.  

It’s a duplex with a HUD resident that we have to stay on top of to keep stuff cleaned up, so look past the grime. Finished install today. Extra $80 for a wall bracket outside, $780 total.  We can get rid of the window unit now.  Those things always seem to lead to issues with the wood frame  

 

 

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48 minutes ago, T’Boo Ted Marshall said:

That’s really inexpensive so good for you. That barely covers our electrical on most of ours.

The 220 and 480 V systems that require wiring get quite a bit more expensive. This is just a 110v standard plug in, so no electrical. And it is one of the kits that comes pre-charged on the coolant. The MrCool brand is pretty similar here, but the cheapest I’ve seen them is $800ish just for the equipment. 

 

I don’t link window units, but I don’t mind these. There are a few spots I might stick some more if this works ok. 

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On 8/17/2021 at 4:55 PM, UT_OB1 said:

The 220 and 480 V systems that require wiring get quite a bit more expensive. This is just a 110v standard plug in, so no electrical. And it is one of the kits that comes pre-charged on the coolant. The MrCool brand is pretty similar here, but the cheapest I’ve seen them is $800ish just for the equipment. 

 

I don’t link window units, but I don’t mind these. There are a few spots I might stick some more if this works ok. 

The simple plug in and play does make a significant difference in cost.  

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Thought I would give an update on things.

  • Fired my Tech Supervisor yesterday.  We gave him multiple chances to get his act together and just couldn't do it.  Continued coming in late, leaving early, not calling customers back, not following up with techs to complete call backs.  Just poor performance and not capable of any managerial type responsibilities.
  • The equipment problems are real.  I've lost probably $100K in sales due to availability of equipment.  We closed the sale, but our main vendor has heat pumps on back order for up to 6 weeks.  People won't wait that long and the big boys carry stock.  We lose. 
  • The transition of the seller has been a real issue that I have to remedy.  He blocks nearly every attempt at doing something new that holds him accountable.  
  • I've been approached by 2 PE groups I know to sell and come join them to help build out Texas.  If the numbers are right I might take it.  It's a lot of upside for me, but none for my partners.  I'd have al the GM's in Texas report to me with counterparts in OK and MO.  

 

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The supply chain issues ain’t no joke indeed. Hearing from Lennox/trane sales ppl they’re expecting it to last well into 22. They thought when state unemployment dried up everything would spring back… wrong. Still can’t find factory workers.

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  • 1 month later...
Posted (edited)

I’m hoping someone here can give me some advice. 
 

Ive got a house on stilts, and the bottom is an unfinished shop (aka border shit storage area). House was built 1890ish and ac added probably 10 years ago before we purchased. The ac duct work was run under the house and the vents are floor vents. 
 

For a while I’ve had one duct that seems to have a lot of moisture in the outer insulation. It would drip occasionally. However today I noticed a another trunk of the duct that looked to be sagging.  I actually cut the foil around the insulation and a shit ton of water ran out.  I found a  number of the ducts are sweating and dripping and even pooling a good bit of water in the insulation (I could squeeze water out of the insulation after cutting the outer foil).  I think it is due to the insulation not covering any of the metal registers, so they sweat and the water runs inside the insulation. None of the ducts themselves appear to be cut blowing cold air in to the shop
 

1) do I need to start over on the duct since a lot of it got very wet?  I’m a little concerned about mold now

2) or can I just insulate around the registers?  And how would i?  Just wrap some foam and tape it?

3) is there a better way to do duct underneath a house than the insulated  flex?

 

Edit to add - it annoys the shit out of me that they ran the vents through the floor. They cut holes in what I think is very nice looking old wood flooring. I’m not even sure how to patch those holes if I were to ever get rid of the floor vents. 

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