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HVAC Install & Maintenance in Southeast Pennsylvania

Well-established for over 30 years!

CASH FLOW
$1,870,310

Specifications

  • Price
    $9,400,000

  • Revenue
    $12,070,644

  • Cash Flow
    $1,870,310

  • Location
    Southeast Pennsylvania

  • Service Area
    Primarily Bucks County (70%), Eastern Montgomery County (20%), and Northeast Philadelphia (10%)

  • Employees
    54: 30 laborers (including 15 service techs, 8 installers, 3 trainers) + office personnel

  • Profit Margin
    15%

  • Intangible Assets
    Well-established for 31 years, word-of-mouth referrals, great reputation in the area

  • Reason for Sale
    Retirement planning

This HVAC installation and maintenance business has been serving Southeast Pennsylvania for over 30 years!  Their services include HVAC installation, maintenance, replacement & repair, water heater installation and repair, home energy audits, and duct testing & cleaning. Clients include residential (80%) and commercial (20%) in Bucks County, Eastern Montgomery County, and Northeast Philadelphia. The highly qualified and experienced team is comprised of 54 employees, 30 of which are laborers. They work out of a 10,000 sq. ft. building, which includes office space, a warehouse, and two loading docks.

 

Known for offering the most trusted brands in the industry, this business services and installs gas heating and heat pumps, air conditioners and air handlers, ductless products, boilers, water heaters, and tankless water heaters. Gross sales have grown each year since 2017, leading to over $12M in revenue in 2019; of that, $7M was from installations and $5M from the service side.  The team attains 6,600 annual maintenance contracts per year.

 

The owner currently spends $500k per year on advertising. By expanding even more on marketing efforts and social media presence, this company is primed for exponential growth. A new owner would not be required to have a Master HVAC License.

Business Highlights

  • Year Established: 1989
  • Location:  Southeast Pennsylvania
  • Service Area:  Primarily Bucks County (70%), Eastern Montgomery County (20%), and Northeast Philadelphia (10%)
  • Services: HVAC installation, maintenance, replacement and repair, water heater installation & repair, home energy audits & duct testing/cleaning
  • Clients: Residential (80%) and Commercial (20%)
  • Building: 10,000 sq. ft. building: 60% office space, 40% warehouse + 2 loading docks
  • Reason for Selling: Retirement planning
  • Personnel: 54: 30 laborers (including 15 service techs, 8 installers, 3 trainers) + office personnel
  • Seller Training Period: 6 months
  • Growth Opportunities: Increase service & replacement
  • Current Owner’s Responsibilities: Oversight & management of sales & installations

Financial Highlights

  • List Price: $9,400,000
  • Gross Sales:
    • 2019: $12,070,644
    • 2018: $11,051,207
    • 2017: $10,193,132
  • Cash Flow:
    • 2019: $1,870,310
    • 2018: $1,507,543
    • 2017: $1,310,626
  • Assets Included in Purchase*
    • Equipment: Duct work machines, office equipment
    • Vehicles: 40 work trucks/vans
    • A/R: $10,377
    • Intangible Assets: Well-established for 31 years, word-of-mouth referrals, great reputation in the area

*amounts may vary, assets may be depreciated, replacement cost, or fair market value 

Cash Flow Analysis

Description of Financial StatementTax Return
Accrual
Tax Return
Accrual
Tax Return
Accrual
Tax Return
Accrual
Notes
2019201820172016
GROSS SALES$12,070,644$11,051,207$10,193,132$10,459,384
Net Income Shown on Financial Statement$1,218,157$1,015,464$919,762$1,111,318
ADDBACKS
Compensation to Owner$405,000$360,800$363,750$373,650David
11% Tax on total W2 Salaries$44,550$39,688$40,013$41,102
Depreciation$203,845$118,349$7,048$7,980
Interest$9,424$7,966$8,085$9,103
Amortization$1,334$0$0$0
Meals & Entertainment$29,820$7,096$13,788$4,850
Personal Fuel$7,000$7,000$7,000$7,000$7k/year for Owner
Personal Vehicle Repair/Maintenance$1,000$1,000$1,000$1,000$1k/year for Owner
Auto Insurance$3,600$3,600$3,600$3,600$3,600/year for Owner's Vehicle
Owner's Health Insurance$7,000$7,000$7,000$7,000$7k/year for Owner
Cell Phone$1,080$1,080$1,080$1,080$90/month
Line 17$12,000$12,000$12,000$12,000$1k for 401k & $11k for Profit Sharing to Owner Annually
Line 18$1,500$1,500$1,500$1,500HSA for Owner Annually
Replacement$-75,000$-75,000$-75,000$-75,000Operations, Customer Issues, Business Relations
TOTAL ADDBACKS$652,153$492,079$390,864$394,865
Seller's Cash Flow = Total Addbacks + Net Income$1,870,310$1,507,543$1,310,626$1,506,183
Profit Margin15.49 %13.64 %12.86 %14.40 %
  • Profit Margin 2019: 15%

Clients

  • Residential (80%)
  • Commercial (20%)

Specific information regarding clients is available upon the receipt of a signed Non-Disclosure Agreement.

Services

  • HVAC installation, maintenance, replacement, and repair
  • Water heater installation & repair
  • Home energy audits
  • Duct testing & cleaning

Personnel

  • 54 W-2 employees

Growth Opportunities

  • Increase service & replacement

Valuation Details

The Firm used a cash flow valuation methodology to determine the purchase price of the business. 

The formula used is as follows:

Cash Flow       x          Prescribed Multiple     =          Fair Market Value

Cash flow is the sum of business net income plus any owner perks and any non-onward going expenses.

A prescribed multiple is determined by a 20 question, 100-point parameter ranking system that is used to analyze the current business health. Each question is based on a scale from 1 to 5: 1 being low, 2 below average, 3 average, 4 above average, 5 high. The average of the responses sum is the business’ prescribed multiplier.

For this business, the 2019 cash flow was used with a prescribed multiple of 5.  With this information, the computation is as follows:

$1,870,310      x          5          =          $9,351,550

The fair market value found above positions the business list price at $9,400,000.

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210 N 78th St. 2nd Floor
Omaha, NE 68114

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The Firm is not a real estate brokerage and therefore the staff will not handle any aspect of the lease, sale or purchase of real estate.