A brief overview on how HVAC companies are valued when they go to market for sale. Comps, KPI, and key drivers are included in this presentation

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W O R L D - C L A S S
S E N I O R - L E V E L A T T E N T I O N
D A T A - D R I V E N
HOW DO YOU VALUE A HVAC COMPANY

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Why Transworld?
WORLD-CLASS | SENIOR-LEVEL ATTENTION | DATA-DRIVEN
Established in 1979, we have a highly
successful track-record of 40+ years
having successfully completed 10,000+
transactions
We leverage our proprietary data sources and
advanced analytics capabilities to access
deeper insights earlier, handle deal
complexities, anticipate what’s around the next
curve, and effectively prepare for a “win-win”
outcome and successful transition
With 220+ offices across 40 states and 16
countries and 600+ deal-makers on the
ground we have that ability to cast a very
wide-net
We are uniquely positioned to represent
the best interest of owner-led /
entrepreneurial businesses as our
corporate culture is based on similar
principles
Our deal team has rich cross-industry,
entrepreneurship, corporate finance, and
private equity credentials having successfully
advised in US $5B+ in aggregate deal value
Our solid relationships with preeminent
financial sponsors and strategic buyers both
domestically and globally, allow us to
maximize your potential of a timely and
successful closing

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KEY DRIVERS OF
VALUE
HVAC Benchmarks
INDUSTRY RULES OF THUMB
SERVICE
STRONG SERVICE
REVENUE BASE
EMPLOYEE METRIC
HEADCOUNT & $
CUSTOMERS
NEW BUILD,
CONSUMERS,
TRUST
INDUSTRY
WHAT ARE THE
TRENDS
• CONTRACTS /
AGREEMENTS INCREASE
VALUE
• RESIDENTIAL SERVICE &
REPLACEMENT IS KEY
• PREVENTATIVE
MAINTENANCE PROGRAMS
DRIVE VALUE
• $200 TO $250K PER
EMPLOYEE
• 5 TO 1 RATIO OF FIELD TO
OFFICE PERSONNEL
• TRAINED SERVICE
PERSONNEL &
TECHNOLOGY TO TOUCH
CUSTOMER AND
ESTIMATE LIFE OF UNITS
PROACTIVELY
• NEW CONSTRUCTION
TEMPTING BUT MUST
EGGS IN ONE BASKET
VALUE WISE
• CONSUMERS TRUST ISSUE
A LEGACY: USE SOCIAL TO
EDUCATE, EMAIL LISTS TO
REMIND OF
MAINTENANCE NEEDS
THEY CAN DO
• TRUST IS KEY
• FRANCHISING GROWING TO
DUAL BLEND ONE SOURCE
(DUNKIN/BASKIN MODEL)
• EXPLOSIVE HOUSING
GROWTH GOOD FOR BIZ
• CHALLENGE OF STAFFING
DUE TO LACK OF TRADE
SCHOOL AND ENROLLMENT
• MILLENIALS ARE LESS LOYAL
SO MUST CONNECT AND
HAVE RETENTION PLAN
25%-40% Annual Sales Plus Inventory
2-3.5X SDE plus Inventory
3-4.5X EBIT
3-4X EBITDA
114,233 HVAC COMPANIES
IN USA
$500 -$1M avg size
50% New Construction
32% Maint & Service
11% Replacement
6% Refridgeration
30-40% COGS
Occupancy 1-6%
Payroll 19 to 25%
Profits 5 to 15%
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VALUE DRIVING YOUR HVAC FOR SALE
Clean Books
• As always good books and records
are vital to getting the highest
and best price
• QB and Hire a CPA
Revenue
• Sticky meaning repeat so
agreements, contracts
preventative maintenance
contracts
Financial and Service Software
• Not nice to have but must have
• The buyer is expecting it…
• It’s the 21st century…make sure you have
automation in CRM and Marketing as well
Marketing
• Leverage dealer relatinships
• Educate and inform consumer
continuously
• PM communications about flushing and
maintenance reminders are valued and
build trust
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Data for HVAC OWNERS
KEY STATS MULTIPLIERS
 237 SOLD IN LAST 10 YEARS
 $1.4 MILLION AVERAGE GROSS SALES
 $708,000 AVERAGE SALES PRICE
 3.7 AVG MULTIPLE / MEAN 1.97
ₓ SELLERS OVERPRICE AND SIT
ₓ AVERAGE 5 EMPLOYEES
ₓ SELLING WITH SBA AT 3X
ₓ PRIVATE EQUITY TARGET AND VERTICAL
INTEGRATION REAL
 AVERAGE SDE $267,000
 MEAN SDE $181,000
 RENT AS % OF SALES LESS THAN 1%
 AVEARGE DAY ON MARKET 267
 70% OR 1 X SALES AS PRICE OF DEAL
ₓ AT $750 IN SALES 1.5 X
ₓ AT 750 TO 1MM 1.8 TO 2X
ₓ AT 1 TO 1.5MM 2 TO 2.5 X
ₓ AT 1.5 TO 2.5M 2.5 TO 3X

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THANK YOU!
MICHAEL SHEA P.A.
CBI, BCI, CMAP
PARTNER
TRANSWORLD BUSINESS ADVISORS
WWW.YOURFLORIDABUSINESSBROKER.COM
MIKE@TWORLD.COM
321-287-0349