Commercial HVAC Service Provider, 20-Year Texas Contractor

$9.8M

Revenue

$835K

SDE

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Full Editorial Writeup

This is a licensed commercial HVAC contractor operating in Texas for over 20 years, serving both private business and public sector clients across maintenance, retrofit, replacement, design/build, and new construction work. The company runs primarily in commercial applications while also offering residential services within its service region, giving it a diversified revenue mix and multiple concurrent projects at any given time. On roughly $9.84M in revenue it produces $835K of adjusted EBITDA, with 2023 to 2025 averages of 36.6% gross margin and 13.5% EBITDA margin.

What makes this notable is the quality of the customer base rather than the raw margins. Roughly 75% of year-to-year revenue comes from repeat customers, and the company holds master service agreements with its largest customer that have run for several years. That combination of MSAs, a returning commercial base, and a two-decade reputation is the kind of durable cash flow that survives a downturn, because commercial HVAC maintenance and replacement is non-discretionary spend for building owners.

The business is owned by a majority and minority shareholder, both seeking full exits to pursue unrelated ventures, and both are willing to stay through a negotiable transition. The operating facility, an approximately 6,425 sq. ft. office and warehouse, is leased from an affiliated entity and can either continue under lease or be folded into the transaction, which gives a buyer flexibility on structure.

Why we like it

Earnings quality is strong for a trades business, with $835K EBITDA on $9.84M revenue and a 13.5% average EBITDA margin from 2023 through 2025. The 36.6% gross margin plus MSA-backed repeat revenue means the profit is recurring rather than project-lumpy, which is exactly what you want to underwrite.
Durability comes from 75% of revenue derived from repeat customers and multi-year master service agreements with the largest account. Commercial HVAC maintenance is a contracted, non-negotiable line item for building owners, so this cash flow holds up when discretionary spending gets cut everywhere else.
The company has operated over 20 years with a premier reputation in commercial HVAC, which is a real moat in a fragmented, relationship-driven trade. Licensing, technician relationships, and a track record of concurrent projects are hard for a new entrant to replicate quickly.
There is a clear operator advantage here: both shareholders are exiting fully, so an owner-operator or platform buyer can install professional management and modernize an under-marketed, referral-driven business. The listed opportunities (multifamily expansion, developer partnerships, targeted marketing) are all growth levers a hands-on buyer can pull immediately.

How to improve it

Formalize and expand the maintenance agreement base within the first 90 days by converting one-off service and replacement customers onto recurring MSAs. Every contract you add raises the recurring revenue floor and directly increases the exit multiple when you sell.
Run the targeted marketing campaign the listing flags, since the business appears to have grown on reputation and referrals with little demand generation. A modest paid and local SEO spend against commercial property managers should widen a customer base that is currently concentrated in a few large accounts.
Push into multifamily and large residential communities where the company already has the licensing and technical capability but limited penetration. This is incremental revenue on existing overhead, which flows disproportionately to EBITDA.
Build formal partnerships with commercial real estate developers and builders to lock in design/build and new construction pipeline. Recurring project referrals from a handful of active developers smooth out the lumpiness of construction-linked revenue.
Address customer concentration risk on the largest MSA account by intentionally diversifying, so no single loss can gut cash flow. Diversification both de-risks the business and materially improves how a future buyer prices it.
Invest in technician recruiting and retention, because labor availability is the binding constraint on growth in every HVAC business. A structured apprenticeship or referral program lets you take on more concurrent projects without turning work away.
Tighten job-level costing and dispatch software to protect the 36.6% gross margin as you scale. Better visibility into which service lines and customers actually make money lets you shed low-margin work and lean into high-margin maintenance.

Diligence notes

Scrutinize customer concentration around the largest MSA account, since master service agreements are highlighted for one customer specifically. Understand what percentage of revenue and EBITDA that account represents, its renewal terms, and what happens to the relationship if the owners leave.
Confirm the affiliated-entity lease terms for the 6,425 sq. ft. facility, because it is currently leased from a related party. Get a market-rate lease in writing (or price the real estate purchase option) so the reported EBITDA is not being flattered by below-market rent.
Verify the 75% repeat-revenue and 13.5% EBITDA figures against tax returns and job-level financials across 2023 to 2025. Separate recurring maintenance revenue from one-time construction and replacement work to understand how much of the $835K is genuinely durable.
Assess key-man and licensing risk given both shareholders are exiting fully. Confirm who holds the master HVAC license, which staff hold customer relationships, and negotiate a transition period and non-compete that keeps continuity intact.
Review the backlog and work-in-progress on the several concurrent projects mentioned, along with warranty exposure and any bonding requirements on public sector work. Project-based revenue can hide margin surprises and liabilities that only show up after close.

Source

Originally listed on BizBuySell. View original listing →