Revenue mix is key to valuing HVAC companies

HVAC Special Report

“Mix drives value," according to one expert's experience when selling and valuing HVAC contractors. Prices for these firms can range from under 10% of revenue to over 100% of revenue—it depends a great deal on the mix of business. For example, a higher percentage of business associated with residential “service work” drives value. The number of active residential service (maintenance) agreements holds value. A heavy dependence on new construction depletes value. Commercial service work helps value—if it’s ongoing and can be proven.

Outlook: Another expert talks about future trends: "The value of qualified HVAC companies (and trade companies in general) is on the rise due to the lower number of people interested in becoming HVAC technicians/tradesmen. The average cost of this service will rise significantly over the next 10 years, making this industry prime for consolidations, mergers, and buyouts.”

The HVAC industry is forecasted to grow more than 6% annually over the next several years, and with this growth comes opportunity for appraisers and business owners. Whether you’re looking to buy, sell, or value an HVAC business, it’s important to consider a company valuation from a number of different angles. BVR's new special report, What It's Worth: Valuing HVAC Companies, covers the unique factors that drive HVAC company value, the fundamental ways to measure what a business is worth, insight into the current market for HVAC companies, and how to boost the value of your HVAC business before cashing out. This comprehensive resource is a must-have to benchmark the value of an HVAC company.