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I Bought an HVAC Company


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I've been aware of it for a bit.  The main difference is this time there is a hard cut off in terms of installation.  The last time it was phased out.  

It will have a big impact on multi family type installs.  We run service/warranty for some larger companies that don't install only and they are trying to navigate projects that will spill over into '23.  I've asked if the manufacturers will stop producing them at some point this year so they are not left with excess inventory but I haven't heard back.  

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2 hours ago, T’Boo Ted Marshall said:

I've been aware of it for a bit.  The main difference is this time there is a hard cut off in terms of installation.  The last time it was phased out.  

It will have a big impact on multi family type installs.  We run service/warranty for some larger companies that don't install only and they are trying to navigate projects that will spill over into '23.  I've asked if the manufacturers will stop producing them at some point this year so they are not left with excess inventory but I haven't heard back.  

So mo money for you?

I see mini-splits are the first on the list and then package units.  How will this affect regular old residential set ups?

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  • 3 months later...
  • 4 months later...
11 hours ago, T’Boo Ted Marshall said:

Update time.  Rollercoaster year is an understatement.

The Good:

  • Got an excellent Service Manager in that runs the process we want on Maintenance and Service calls.  High potential he becomes the GM.
  • Fully integrated our management system (Service Titan) with his help and it is priced accurately for all jobs.  This was a huge undertaking and if you don't have someone that really knows this system it can be a killer.  
  • Acquired a shop north of us that has about 3K customers in the database. 
  • Should finish the year with around 11% growth.

The Bad:

  • Parted ways with the seller of the acquisition at the end of September.  He was very disorganized and highly emotional.  Late night rambling email rants became ridiculous.  He did not account for his time on many jobs and that did impact profitability to a small degree. Just would not accept our process and absolutely would not accept any responsibility on many issues we tried to resolve.  Typical seller of a small business.
  • Educating the new customer based has been difficult.  It is pretty rural (Sherman/Denison area) and seller would often times bill them after services.  We collect at time of service.  I'm not a lender.   
  • Hired 2 absolute dudes for salesmen during one of the hottest summers in recent memory.  This hurt and is impacting us more right now.  The first was more of an account manager and placed little effort on outside leads and network building.  I spent a lot of time coaching him, but some guys are hunters and some are gatherers.  The second was placed in an involuntary hold a week after he started.  We quickly found out he was drinking while on company time and in a company vehicle.  He lasted less than 30 days and had over 30 opportunities for system change outs...Closed 1.  
  • Profitable production is really tight right now.  This is expected during this time of year and the schedule is full but jobs are slowing and sub crews are coming in asking for work.  This tells me it is across the board and not just here.

 

Good times....good times.....

Always appreciate updates on here. 
 

I have friends who work at of the big dog brand manufacturers. Said it’s a bitch on their end with the inflation, supply chain, gov regs all slamming em still. 

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  • 3 weeks later...

@T’Boo Ted Marshall thought this might be a good place to ask…

 

Could a dirty coil cause a higher amp draw that would lead to a disconnect catching on fire?  I had an electrician look, and he said the heat unit was set up as a 10kw unit on a 30A circuit and the wire was too small or it should have been set up as a 5kw heater. AC company that did the install said it was a dirty coil. 

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[mention=479]T’Boo Ted Marshall[/mention] thought this might be a good place to ask…
 
Could a dirty coil cause a higher amp draw that would lead to a disconnect catching on fire?  I had an electrician look, and he said the heat unit was set up as a 10kw unit on a 30A circuit and the wire was too small or it should have been set up as a 5kw heater. AC company that did the install said it was a dirty coil. 

If 10 kw was hooked up it alone draws -39 amps plus the blower motor -7ish amps so 46 amps was way more than the circuit was rated for. at 39 amps it was most likely a 10 gauge wire rated at 30 amps as well. So I’m my opinion yes it could cause a fire. Breaker should have tripped prior to this.
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  • 9 months later...
12 hours ago, BillyMadison said:

Just curious about an update. Am in the ETA space and always wondering if the HVAC space is worth getting into

Sure thing.

A year removed from parting ways with the seller and we are better off for it in many ways.  Our process is right, what I need is techs that follow it consistently.  It's like at times they are afraid to make money. 

Just moved our shop up north a bit.  Dropped rent from $4500 to $1700/month.

Hired a marketing firm in Austin to assist with PPC, SEO, SM, etc..  One month in, so not much to report there.

Landed some bigger Commercial jobs but those are less profitable than Resi.  

Finally got a good sales type guy.  He's still a tech but runs the same process we do and it shows.

Got the financials set the way they should be so I can accurately track profit margins.  This was an undertaking.  

 

On a separate side note, I'm part of a PE firm acquiring HVAC, Plumbing and Electric companies across the US.  Just closed our first in NC a few weeks back and looking to close another in KC before Thanksgiving.  We have a $100MM to spend with a very attractive upside option for owners that partner with us.  Exit timeframe is 24-36 months based on our current pipeline.  

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21 minutes ago, T’Boo Ted Marshall said:

Sure thing.

A year removed from parting ways with the seller and we are better off for it in many ways.  Our process is right, what I need is techs that follow it consistently.  It's like at times they are afraid to make money. 

Just moved our shop up north a bit.  Dropped rent from $4500 to $1700/month.

Hired a marketing firm in Austin to assist with PPC, SEO, SM, etc..  One month in, so not much to report there.

Landed some bigger Commercial jobs but those are less profitable than Resi.  

Finally got a good sales type guy.  He's still a tech but runs the same process we do and it shows.

Got the financials set the way they should be so I can accurately track profit margins.  This was an undertaking.  

 

On a separate side note, I'm part of a PE firm acquiring HVAC, Plumbing and Electric companies across the US.  Just closed our first in NC a few weeks back and looking to close another in KC before Thanksgiving.  We have a $100MM to spend with a very attractive upside option for owners that partner with us.  Exit timeframe is 24-36 months based on our current pipeline.  

Interesting. I am part of a senior leadership team that was brought on by a PE group as we acquired a large HVAC company in Florida. We closed last November. Company lost $5 million in 2022, we are going to make about $ 8 million in profit this year. I run our RNC sales team.

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25 minutes ago, Incredulity said:

Is your HVAC part of the PE roll up?  Is the roll up operating the aqusitions decentralized, or as one unit.

 

just out of curiosity 

My company is not.  When dealing with PE they want larger platforms deals starting around $2MM in Adjusted EBITDA.  If mine were there, yes I would sell it to them.  

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8 minutes ago, LebongJames said:

Interesting. I am part of a senior leadership team that was brought on by a PE group as we acquired a large HVAC company in Florida. We closed last November. Company lost $5 million in 2022, we are going to make about $ 8 million in profit this year. I run our RNC sales team.

Nice!  Would love to get into Florida.  We had 2 near Ft Myers that we were way past LOI on, but with one the owners became unrealistic and tried to retrade with a 50% price increase. 

Was the HVAC a marketed deal or proprietary?   

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On 10/5/2023 at 8:59 AM, Incredulity said:

Is your HVAC part of the PE roll up?  Is the roll up operating the aqusitions decentralized, or as one unit.

 

just out of curiosity 

Sorry I missed the second question.  

Until we get to scale each will run on its own.  Integration and implementation of things like Field Service Management platforms or accounting is often a difficult and costly undertaking.  

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  • 3 months later...

Figured I would post an update since I've been trying to manage a few situations.  Rough '23.  System change outs were way down for us.  Service, repair and maintenance were good.  Increased our agreements by 50% to around 400.    

Cash flow is an issue right now and I've got to make some very tough decisions very quickly.  We built the company framework for growth but the growth didn't come with it this year.  

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Thanks for the update-  

I wish the Business Environment thread was still getting updates.

IMPO 23 definitely was a sharp change from 20-22.  Allocations ended and companies had to work for business again.  I've heard horror stories and others seem back in a pre-pandemic  normal routine.

I've been through the prepping for growth/price is right horn thing and it fucking sucks.  Only thing I would say is adjust your framework sooner rather than later, better to deal with growth leaving customers wanting some more versus staff/infrastructure wasting away.  That literally becomes a deadly cancer.

 

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  • 2 months later...
Posted (edited)

I don’t know anyone who had an easy 2023 - and judging from my client mix on the legal side I would say it’s broad based. I really don’t know where the GDP gains are coming from.

But at the same time on the legal side I was insanely busy from November and still am. I even hired a mid-level attorney to help. I think I see a break starting in May but that’s just our personal ebb and flow. 4 major M&A deals in 3 calendar quarters. What is most interesting about those deals though - all of the sellers wanted out, nearly exhausted with strained businesses - even for the deals that were not distressed. 

on the business side, I’m a 35% owner in a distribution company whose industry is reliable in up and down times, first year down in 8 years of being in business (though still up 2.5x in 4 years). Growth opportunities were non-existent in 2023. This year looks better.  

Another company I’m involved with is having real difficulty getting sales traction, not sure where that one will go. 

we decided to close a hospitality business, made 2x in 6 years, ended up a meh deal.

and our construction company - Austin centric -  is almost completely dormant right now.  We have 1-2 custom jobs per year but nothing spec lined up which essentially means no projects on the market for the next 2 years at least. 

2023 was a bitch of a year.

Edited by troph
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4 hours ago, troph said:

and our construction company - Austin centric -  is almost completely dormant right now.  We have 1-2 custom jobs per year but nothing spec lined up which essentially means no projects on the market for the next 2 years at least. 

What kind of equipment do you have?  Do you know how many landowners would pay a pretty handful for dozer/skid-steer/backhoe work.  Clearing out stock tanks.  Mesquite and cedar work, etc.  

If I had deeper pockets, I could keep a dozer crew busy for months just on mesquite nonsense.  

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2 hours ago, BabaYaga said:

What kind of equipment do you have?  Do you know how many landowners would pay a pretty handful for dozer/skid-steer/backhoe work.  Clearing out stock tanks.  Mesquite and cedar work, etc.  

If I had deeper pockets, I could keep a dozer crew busy for months just on mesquite nonsense.  

we build luxury residential homes mostly in central austin, some at the lake with subs exclusively no dedicated crews and no tools or equipment. the only tools we own are those in our garage and consistent with a typical household set of tools.

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37 minutes ago, troph said:

we build luxury residential homes mostly in central austin, some at the lake with subs exclusively no dedicated crews and no tools or equipment. the only tools we own are those in our garage and consistent with a typical household set of tools.

Well damn, just when you think there's a cool chick with earth moving toys!

Hopes...dashed.....

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3 hours ago, troph said:

we build luxury residential homes mostly in central austin, some at the lake with subs exclusively no dedicated crews and no tools or equipment. the only tools we own are those in our garage and consistent with a typical household set of tools.

Do you or your partner know anything about heated makeup air for high cfm vent hoods?  We need to do this on our remodel and it's incredibly difficult to find anyone who knows anything about this, especially in the mountains.

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Posted (edited)
1 hour ago, Chewbacca said:

Do you or your partner know anything about heated makeup air for high cfm vent hoods?  We need to do this on our remodel and it's incredibly difficult to find anyone who knows anything about this, especially in the mountains.

troph wife here - HVAC contractors do it. It’s basically a fan that they install in the ceiling and wire up in the ceiling that goes through the roof. Most of the time we install them near the vent hood.  I don’t know about heated though, we don’t heat our make up air here. Here’s where ours is… vent hood is inside the cabinet.
 

 

image.jpg

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1 minute ago, troph said:

troph wife here - HVAC contractors do it. It’s basically a fan that they install and wire up that goes through the roof. Most of the time we install them near the vent hood.  I don’t know about heated though, we don’t heat our make up air here. 

Thanks for the response!

That's our problem, I think.  We are doing radiant heat so we don't have an HVAC contractor.  We have a plumber doing the plumbing and heating.  Sounds like we might need to find an HVAC guy for this.  We need it heated because I'm not sucking 1200cfm of sub-zero air into my house in January.

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Posted (edited)
11 minutes ago, Chewbacca said:

Thanks for the response!

That's our problem, I think.  We are doing radiant heat so we don't have an HVAC contractor.  We have a plumber doing the plumbing and heating.  Sounds like we might need to find an HVAC guy for this.  We need it heated because I'm not sucking 1200cfm of sub-zero air into my house in January.

Yes, way out of a plumber’s wheel house. 

we don’t do heated here because we’re typically not below freezing for most of the winter. The heated units will obviously cost more and require more power. I’m guessing a 240v so be sure to get with your electrician on it too. If they have gas ones, your plumber will be the one to run that line. 

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27 minutes ago, Chewbacca said:
1 hour ago, troph said:
[mention=1769]Chewbacca[/mention] troph back - she’s a Reddit diver and just ran across your Reddit post! Ha. 

Gotta cast a wide net.

For sure! 

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