Generally speaking, the HVAC industry is a pretty stable business to be in. And if you are looking to make a transaction in 2019, whether buying or selling, the outlook for such business dealings looks very promising at this time. As public interest and government regulations continue to push for energy-efficient designs and products, utilization of more advanced, cost-effective HVAC systems that monitor and preserve energy has increased.
This is expected to drive consolidation of HVAC organizations as they look to increase their ability to scale and grow across both residential and commercial developments. Although there is some expectation of a possible recession in the next one to two years, it does not seem to be slowing any of the merger and acquisition activity we have seen among HVAC companies.
As a result, being aware of the unique advantages and challenges of HVAC businesses in the current financial climate can help you make the best decisions when it comes to your transaction.
HVAC Industry Advantages
One of the most beneficial elements of the HVAC industry is the reliance on and necessity of manual maintenance. With the presence of technology increasing in nearly every industry, many jobs are becoming obsolete as machines are able to perform more work, faster. But in the HVAC industry, automation cannot be used to complete on-site customer repairs. This is part of what gives the industry its stability and protects it from the harshest effects of any potential recession.
Somewhat ironically, the need for manual repairs increases the more advanced HVAC systems become. Due to the complex nature of these new systems, it is unlikely that a customer would be able to repair it themselves, though most don’t attempt this regardless of the technology of the system, or call someone outside of their original vendor. So while advances in automation and technology may be worrisome for other industries, HVAC companies should plan to service their customers and monetize these interactions when possible. Doing so will continue to build the value of your business.
HVAC Industry Challenges
Unfortunately, when your business relies on manual labor, you have to find and hire employees capable of performing the work. Therefore, one of the biggest challenges currently facing the industry as a whole is not only finding well-trained talent to hire, but keeping them with your company once you do. This is why many companies have gotten creative with their recruiting tactics and have been proactive in implementing changes that will increase employee satisfaction.
A quick way to get connected with potential employees is to establish connections with local vocational or trade schools with HVAC training programs. When you develop and foster relationships with program administrators, they will likely take the time to introduce you to some of their most talented students. After all, they want to help students find job placements upon the conclusion of their training.
Alternatively, some companies have begun to develop their own comprehensive employee training programs in an effort to attract hungry, young talent. This means that your trainees will start contributing to your workforce much faster as they receive on-the-job training while they progress their skills. Going this route, however, requires significant upfront investment on your part as time, money, and other resources will need to be devoted to creating and implementing the program.
Finally, keeping strong talent continues to threaten the success of many HVAC companies. Technicians are often required to work long hours filled with strenuous activity, no matter where they are. You can stand out from other employment options by showing them how much you value them as employees. Initiatives such as improved healthcare coverage, increased wages, and enhanced time off policies can go a long way in making your employees feel more like family.
How The Hatteras Group Can Help
The Hatteras Group is a collaborative team of professional intermediaries and advisors that guides business owners and entrepreneurs as they navigate the complex process of mergers or acquisitions in the HVAC industry. Generally, we work with those companies whose annual revenues are $5MM to $100MM.
If you are trying to value your business in an effort to sell it, we can help you audit the health of your company with an advanced 10-point evaluation checklist to determine if there are any issues that could potentially derail a sale in the future. Contact us today for more information!