The demand for heating, ventilation and air conditioning (HVAC) companies has been rising in the past few years, with buyers willing to pay higher multiples than ever. According to a report by Precedence Research, the HVAC equipment market was valued at approximately $130 billion in 2021. The market size is expected to hit $206.89 billion by 2030.”
Considering this strong buyer demand and other factors, 2022 could be the best year to sell your HVAC business. ACT Capital Advisors has helped sell HVAC companies in the past, and we are currently seeing an increase in M&A deal activity in the sector.
In recent years, this industry has been attractive to buyers because of its stability and recurring revenue business model. The industry outlook remains positive, as the need for HVAC services is not going away in the foreseeable future.
The pandemic hit some industries hard, but the HVAC space was not one of those. Many people began wanting to install new ventilation systems or improve their current ones to help reduce the spread of the COVID-19 virus. Increased urbanization and interest in energy-efficient systems have also made a positive impact on the HVAC industry.
Increased government initiatives have played a part in supporting the growth of the HVAC industry. For instance, the Energy Star Verified HVAC Installation (“ESVI”) program offers customers and HVAC contractors positive incentives. According to the Department of Energy’s website, “ESVI helps utilities cost-effectively deliver energy savings through third-party verification of the quality installation of HVAC equipment.” Contractors who participate in the program can expand their business and better appeal to customers, saving more on their HVAC installations.
When is the Best Time to Sell?
The best time to sell your HVAC business is when it’s doing well. Selling a company at its best might seem like common sense, but many business owners want to hold on to their business while it’s successful, then realize too late that they should have sold it at its peak.
The worst time to exit is when revenues are down, as no one will want to buy a business that’s not profitable. If you can demonstrate your growth trajectory, buyers will be more than willing to pay top dollar for what you’ve built.
Score Your HVAC Business
Even if you’re not looking to exit anytime soon, it’s never too early to evaluate your business and see if any areas need improvement. Our Score Your HVAC Business worksheet can provide you with a better understanding of how you score in several different value categories specific to your industry.
Download the worksheet and fill it out to get your score today. Maximizing how you perform in each value category can help you achieve a better price and terms in a future exit. If you’re interested in the potential value of your business, would like to begin the exit process, or have any other questions, please contact:
John Norton
Managing Director
jnorton@actcapitaladvisors.com
206-486-3409
