Commercial HVAC & Mechanical Contractor, Memphis Market (Olive Branch, MS)

$6.0M

Revenue

$800K

SDE

4.9x

Multiple

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Full Editorial Writeup

This is a commercial HVAC and mechanical contracting business operating in the greater Memphis market from a base in Olive Branch, Mississippi. Founded in 2011, the company generates roughly $6M in annual revenue with reported cash flow of $800K, positioning it as an all-in-one mechanical contractor that can handle multiple services and installations on a single project. The team includes 38 people (30 full-time employees plus 8 contractors) and runs a substantial field operation with 25 trucks/vans and 4 trailers included in the sale.

The business serves commercial clients on installation and service work, and the owner claims a strong enough local reputation that no marketing dollars have been spent in six-plus years. Demand appears to outstrip capacity: the seller states the company regularly declines new customers and projects because it is booked out for extended periods. That is a meaningful signal for a buyer with the operational capacity to absorb backlog.

The asking price is $3.9M against $800K cash flow, a 4.88x multiple, and includes $400K of inventory and $80K of FF&E. The 16,000 sq ft building on 1.7 acres is owned by the seller but NOT included in the asking price. The owner will finance the real estate separately over 10 years at below-market rates, which gives a buyer flexibility on the property without inflating the operating multiple.

Why we like it

Earnings quality looks solid for a commercial mechanical contractor at this size: $800K cash flow on $6M revenue is a healthy 13% margin, and the 4.88x multiple is defensible for a business with 38 people and a real backlog. The presence of $400K in inventory inside the asking price cushions the effective operating multiple.
Durability comes from a diversified commercial book plus the all-in-one positioning that lets the company win multi-service projects on a single job. Commercial HVAC and mechanical work is essential, non-deferrable infrastructure spending, and equipment eventually fails regardless of the economic cycle.
Market tailwinds favor the Memphis metro, an active industrial and logistics corridor where commercial construction and facility upgrades keep mechanical contractors busy. The seller says they regularly turn away work because they are booked out, meaning the demand exists to grow without inventing it.
Operator advantage is real here: a buyer already in the trades or an adjacent contractor can bolt this on for instant scale, a 25-vehicle fleet, and entry into a new metro with zero marketing spend. The owner's 6-month, part-time transition plus phone support reduces the handoff risk.

How to improve it

Attack the turned-away demand immediately. If the company routinely declines projects due to being booked out, the fastest revenue unlock is adding one or two more crews and staggering scheduling, converting lost bids into billable backlog within the first quarter.
Build a recurring service and maintenance program. This is a project-and-install business today with no contract revenue; layering in preventive maintenance agreements on installed systems creates predictable monthly cash flow and locks in future replacement work.
Reduce owner and key-person dependence during the 6-month window. Document estimating, bidding, and vendor relationships, and cross-train a lead estimator and operations manager so the business runs on process rather than on the seller's reputation and phone.
Turn on a modest marketing engine. The company has spent nothing on marketing for six-plus years; even a light spend on a commercial-focused website, Google Business presence, and targeted outreach to property managers and GCs could expand the top of the funnel meaningfully.
Formalize the real estate decision early. The 16,000 sq ft building is owned by the seller and offered on 10-year seller financing below bank rates; model whether owning the facility at those terms is cheaper than the current lease and protects against future rent increases.
Review contractor mix versus W-2 staff. Eight of the 38 workers are contractors; assess classification risk and whether converting core contractors to employees improves retention, scheduling reliability, and margin control on larger commercial jobs.
Implement job-costing discipline. At $6M revenue on project work, small estimating errors compound; a tighter job-costing and change-order process protects the 13% margin and surfaces which project types are actually profitable.

Diligence notes

Scrutinize the cash flow definition and add-backs. The listing reports $800K SDE with no EBITDA disclosed; verify against tax returns and financials, and confirm whether owner compensation, the current building lease expense, and any personal expenses are properly reflected.
Quantify customer and project concentration. A booked-out contractor may be reliant on a handful of GCs or repeat commercial accounts; pull a revenue-by-customer report for the last three years to test how fragile the backlog really is if one relationship leaves.
Validate the backlog claim and pipeline. The turned-away-work story is the core thesis; ask for signed contracts, work-in-progress schedules, and bid logs to confirm demand is real and not seasonal or overstated.
Inspect the fleet and equipment condition. Twenty-five trucks/vans and 4 trailers are included; get an age, mileage, and maintenance report because deferred replacement capex on a large fleet can quietly erase a chunk of the $800K cash flow.
Examine the contractor classification and licensing. Confirm the mechanical and HVAC licenses transfer or that a qualifying party is in place post-sale, and review whether the 8 contractors create worker-classification exposure.
Model the separate real estate purchase. The building is not in the asking price but is offered on 10-year seller financing; obtain the proposed terms, price, and a lease review to decide whether to buy, keep leasing, or renegotiate, and factor it into total cost of ownership.

Source

Originally listed on BizBuySell. View original listing →