Mordecai Gal: HVAC industry M&A expert? The HVAC and M&A market is already very big, with a value of $25.6 billion in the United States alone. It makes sense that HVAC businesses would be busy because nearly every home and commercial property in the country has a heating system and air conditioning, which is becoming an essential service as well. The growth won’t stop at its current numbers. Estimates suggest the HVAC services market could grow to $35.6 billion by 2030. Other estimates say that HVAC companies could experience a compound growth rate of 9.7% between 2019 and 2025, so there’s money to be made if you handle your business the right way. And that’s just for HVAC services. The HVAC systems market is valued at $15.16 billion as of 2020 and could experience a compound annual growth rate of 6% between 2021 and 2028.

You can also capitalize on this growth by expanding your business in your local area by acquiring another company or merging with it. There is risk in any M&A agreement, but the HVAC industry shows no signs of slowing down because there will always be demand for these services. That makes it one of the safer industries for M&A to work out well for both sides. At the same time, not all mergers and acquisitions are the same, so doing your due diligence before signing any transaction is essential.

If you want a successful M&A deal, you should always work with the right team. Sometimes business owners think they can do it alone and end up making mistakes along the way. Professional deal makers can create the exact leverage you need to reach a successful deal. It is in your interest to have a deal maker by your side as the other side will also have a team of professionals. As Mordecai Gal, operations director at AccessHeat Inc, puts it “Your business should always have proper financial records, especially when you want to exit. It is important that you understand working capital, as it will impact the deal. Have a thorough understanding of how things flow in several accounting statements, such as a profit and loss. You should also have a good idea of your balance sheet when walking into an M&A deal.”

Sustainable Building Design is a trend that adds value to the HVAC business : Sustainability is a primary consideration when designing new buildings, often referred to as green buildings design. HVAC is a key component in green buildings design as it is one of the primary energy consumers. The increased focus on sustainability has led to several advancements in the industry, such as ventilation systems using more use of natural airflow to lower the energy consumption of the facility. HVAC systems using alternative power sources and using new building materials that help to maintain a more constant temperature in the buildings where a powerful HVAC system isn’t necessary.

Evaluate the strength of the existing team, starting by the leadership, all the way to field execution team. You can assess the team by reviewing their background, experience, performance reviews, tenure in the company, and customer feedback. Ultimately, this is perhaps the most critical element of the company, especially an HVAC company since its the team the one that drives all sales and execution. An important consideration from the team is their tenure and time to retirement. Unfortunately, the HVAC industry has experienced a shortage of labor for some time, which makes it particularly important to understand both time-to-retirement as well as talent replacement initiatives.

For a seller, it makes sense to test the market now because the economy is opening up and there is less hesitancy in the marketplace. Many business owners who were planning to sell last year might have decided to wait. After all, the market was highly unpredictable in 2020, and it scared both buyers and sellers into putting M&A off to see how things played out. With the economy and health situation trying to return to normal and valuations holding up, much of this hesitancy is evaporating. That has created a situation where there’s motivation to get these deals done in a hurry. Business owners who ended up holding on to their companies for an extra year could be looking for a quick out now that they know they’ll be getting fair value.

There have been hundreds of HVAC mergers & acquisitions over the past few years, and the trend is continuing to grow as time passes. As a result of this changing tide, AccessHeat has identified an opportunity that benefits all parties involved. Investors and business owners alike are finding that strength in numbers, and a blending of skills has made it possible to fill gaps within businesses and build a more solid bridge to success. Small companies with different redeeming qualities have joined together to become powerhouses in the HVAC world and weave their talents together. With an abundance of capital, many investors like us are eager to help these companies grow exponentially. We are uniquely positioned to put our working capital into the market so that you can plan the successful exit you always envisioned.