Companies Continue to Expand through Acquisition
Harris, a St. Paul-based and leading mechanical contractor, acquired HVAC Controls & Specialties on April 1, 2021. Acquisition of the Garden City, ID company will allow Harris to expand its workforce and services into and across the state of Idaho. Leadership said, “This acquisition reflects our continued commitment to serve customers throughout Idaho. Our values align as well. [HVAC Controls & Specialties has operated] as a close-knit family business with a culture that emphasizes loyalty, strong ethics, and a ‘do it right or don’t do it’ mentality”. The two companies had worked together on a project for St. Luke’s Hospital in Boise, ID throughout 2020. The acquisition will provide more access to skilled technicians, programmers, and installers.
High demand from private equity groups and strategic buyers have been driving attractive prices for sellers in this industry across the country.
Precedent Comparable Transactions: HVAC Industry
Middle Market companies (above $5,000,000 in revenue) in the HVAC industry (SIC 1711) had an EBITDA2 Median Multiple of 4.0x, based on 18 transactions between 2011 and 2021.
Main Street companies (below $5,000,000 in revenue) in the HVAC industry (SIC 1711) had a SDE1 Median Multiple of 2.4x, based on 213 transactions between 2011 and 2021.
If you’re contemplating a sale of your HVAC company or simply would like to understand your options, contact a Sunbelt Advisor today. We have closed multiple strategic and financial transactions in the HVAC industry and have industry specialists ready to answer any of your questions.
We also offer a no-obligation, complimentary value range for your company.
1Seller’s Discretionary Earnings – Seller’s discretionary earnings is defined as net profit before taxes and any compensation to owner plus amortization, depreciation, interest, other non-cash expense and non-business-related expense and normally to one working owner. (Source: BV Market Data)
2Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) – EBITDA is Net Income with interest, taxes, depreciation, and amortization added back to it. EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. However, this is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next. (Source: BV Market Data)
