IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities.  Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Erin Ward. Mr. Ward is a senior mergers & acquisition intermediary at IBA (www.ibainc.com):

Selling an HVAC Company for a Strong Market Value

I recently completed a sale of my fourth HVAC company over the past few years. They include Pinchiff Mechanical, Tri Mechanical, Heat Transfer and recently Temperature Control. There are several factors that drive the multiple or sale price that are consistent in these businesses. Three of the companies were in the commercial sector and only one in residential, but the factors were the same in each type of company. Here are the most important factors that drive value and increase the selling price of a heating, cooling, or home services business:

1. Mix of customers. For the commercial side revenues is commonly broken up into new construction, retro fits and service/maintenance. Having a robust service and maintenance department with 40% or more of revenues derived from this division will drive the value higher. This recurring revenue reduces the risk to a buyer. Relying too much on new construction increases the risk and drives down the value. Likewise, for residential HVAC companies, if they get too complacent in new construction and are not putting in any effort in the service and maintenance side, the value will dip. There are new point of sale programs that can add customers at the time of service that can lock in these maintenance customers for multiple years or in evergreen contracts that automatically renew. Examples include: https://hotfix.payzerware.com/ and www.servicetitan.com.

1. Employees. As all business owners know in this sector, finding and keeping licensed employees is very competitive. If your company is growing, one of the best ways to get more licensed employees is through acquisition. JH Kelly  (www.jhkelly.com) bought Pinchiff Mechanical and Tri Mechanical to gain commercial technicians and to help them grow in the Seattle area. Successful companies bring on trainees and supply free education, bonuses and vacations. In the current market, licensed employee holds the power, so be diligent and proactive to keep them under your employment.

1. Financial Performance. Buyers are looking for consistent growing revenue, profitability, and EBITDA over the last three years.  If there is one spike in profitability or a dip in revenues, this can adversely affect the value.  Buyers are also looking for a streamlined operation where the owner is not involved in the day to day. Other factors include seasonality and workload balances, profit margins on the scope of work and recurring revenues.

1. Other Factors to consider. What is the quality and age of vehicles, inventory level, technology adoption, the size of your company, the location and growth potential.

From my experience and perspective, these are the most important factors that can drive the value and increase the sales price for an HVAC company. Please reach out if you have any questions about  selling your HVAC company in Washington, Oregon or Alaska, I welcome to be a resource whether a sale in 2026, 2027, or 2028 is desired.  IBA has been professionally representing owners of home services businesses (Heating, Cooling, Electrical, and Plumbing) since 1975 in Washington & Oregon. G&S Heating (https://ibainc.com/blog/nesha-ruther/the-story-of-roger-thompson-gs-heating/) and Washington Generators  (https://ibainc.com/blog/nesha-ruther/the-story-of-eric-michelle-johnson-washington-generators/) are two sales that were featured in IBA’s American Dream Achieved Series.

If you have questions relating to the content of this article or the process associated with selling a business, Erin Ward would welcome the opportunity to talk with you.  Mr. Ward can be reached at (425) 454-3052 or erin@ibainc.com.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, accounting, legal, and financial planning communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.