Arkansas HVACR NewsMagazine May 2025 Issue

HVACR NewsMagazine May 2025

Business & Marketing Tips

into the business, and continue the journey. Business Acquisitions and Brokers Acquisition companies are all the rage today, but even some of them get it wrong. It is the author’s opinion that an acquisition can be a very handsome tool for owners ready to hand the ball off to continue the play. Once you commit to giving up your brand to either an acquisition team or a business broker your input ends in most cases. It may have been your baby, but you have given up parental rights. We hear it many times. “Man, they gave me a great deal, but I hate what they are doing to the business.” Some companies are absorbed by a larger company, adopting their new plan, shuffling management only to tear apart a good company. Some acquisitions purchased a local popular brand and immediately changed the name, later wondering why they lost 80% of business traffic. Some owners spend a lifetime building a brand, only to see the acquisition disperse customers back into the local HVAC pool after a mismanaged transition. For those that run a business on a solid basis, an acquisition may give many owners a way to realize a profitable ending to a long journey. Sometimes a better deal than a business broker, due to a similar industry understanding the company’s value. Employee owned Another successful model utilized often is the employee-owned plan. The plan can keep the original business engaged for many years to come while the current management is paid for their contribution

and allowed to at step aside. This plan is flexible and can be tailored in many ways. Valuations So how do we know if an offer is a good one? Are you farther down the road and see a business you might want to purchase? We will review what information will be required of you when selling your business and how that information is digested. If you have anything you paid for, like vehicles, computers, equipment, real property, or paid inventory, these are tangible (physical) assets. Intangible assets are company name, reputation, past business history and customer base. In business, intangibles are much more difficult to value but are more valuable than physical assets in a well run company. Tangible assets tell the prospective buyer you are equipped to provide service to your customer base without further physical asset purchases. Customer files or records of transactions are a combination of tangible and intangible assets. A customer file that contains service history and equipment purchases over several years is a valuable piece of information. Having several hundred to several thousands of repeat customers is invaluable. This paper trail provides proof you have potential to keep positive earning flowing. We have seen companies that had a great reputation, substantial customer base, but lacked the knowledge to maximize earnings. This is where acquisition companies try to hit one over the fence, giving the owner a chance to leave the business with a nice income, while understanding there is additional earnings available.