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Is This $4.5M HVAC Business with 33% Margins A Smart Buy?
Sep 20, 2024
This week features John Wilson, owner of the Owned and Operated Podcast and a specialist in plumbing and HVAC acquisitions. He talks about a $4.5M HVAC business boasting 33% margins, questioning the sustainability of these figures as it scales. They dive into the importance of focusing on core services over multi-trade diversification for better margins. John also sheds light on the Northeast market dynamics, including the influence of union presence on pricing and strategy, and the complexities of navigating service work versus new construction.
41:57
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Quick takeaways
- The HVAC business showcases a robust financial performance with significant recurring revenue, bolstered by a strong customer base and favorable market conditions.
- Operating as a multi-trade business may complicate efficiency and margins, suggesting that specialization could ultimately enhance both service quality and profitability.
Deep dives
Overview of the Plumbing and HVAC Business
A plumbing and HVAC business located in the Northeast has generated notable financial performance, with $4.5 million in revenue and an EBITDA of $1.4 million. The business focuses exclusively on residential services, with no new construction involvement, positioning it favorably within the market. The company has developed a solid customer base of over 2,500 active accounts, with an average customer spend exceeding $1,500, which indicates a strong demand for its services. This model ensures a recurring revenue stream primarily from repair services and maintenance contracts, contributing to its financial stability.
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