Established HVAC & Refrigeration Company, Michigan Commercial & Residential

$5.5M

Revenue

$1.2M

SDE

4.2x

Multiple

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Full Editorial Writeup

This is a full-service HVAC and refrigeration operation in Michigan doing $5.5M in revenue with $1.2M of owner cash flow, a healthy 22% SDE margin for a mechanical-services business. The company plays across both HVAC and commercial refrigeration, which is a smart combination: refrigeration adds a technical, higher-barrier revenue stream that most residential HVAC shops cannot touch. Services span installation, repair, replacement, preventative maintenance, and emergency service.

What makes this one interesting is the customer diversification. Instead of leaning entirely on residential, the book spans hotels, restaurants, gyms, wellness facilities, and other commercial and specialty accounts. That hospitality and fitness exposure matters because those facilities run climate and refrigeration systems hard, break often, and cannot afford downtime, which creates a natural pull toward maintenance contracts and repeat emergency calls.

The listing is light on specifics (no founding year, no breakdown of recurring vs project revenue, no team detail), so a buyer is underwriting the category and the cash flow more than a fully documented operation. Priced at $5M against $1.2M cash flow, this is a 4.17x deal, which is fair-to-slightly-full for a services business of this size unless the recurring maintenance base and refrigeration expertise are genuinely durable.

Why we like it

Earnings quality is solid for the category, with $1.2M of cash flow on $5.5M of revenue and a reported $1.05M EBITDA. The gap between SDE and EBITDA is modest, suggesting owner add-backs are reasonable rather than aggressive, which is the kind of clean profile you want to see before writing a check at this size.
The dual HVAC and refrigeration capability is a real moat. Commercial refrigeration is a licensed, technical trade with a thinner labor pool than residential HVAC, so the shops that can service walk-in coolers, kitchen refrigeration, and hospitality systems face less price competition and command stickier accounts.
Demand here is genuinely recession-resistant. When a restaurant's walk-in fails or a hotel's chiller goes down, the repair happens regardless of the economy, and preventative maintenance on food-service refrigeration is close to mandatory. That non-discretionary demand is what makes this business bankable.
The customer base is diversified across commercial, residential, hospitality, fitness, and specialty markets, which reduces concentration risk and creates multiple avenues for maintenance contracts. A buyer who leans into service agreements can convert this transactional mix into a recurring, higher-multiple revenue base over time.

How to improve it

Audit the current split between one-time project work and recurring maintenance contracts, then build a formal preventative maintenance program with annual agreements for every commercial and hospitality account. Recurring service revenue is worth a materially higher multiple than break-fix work and stabilizes cash flow across seasons.
Systematize the refrigeration book specifically, since it is the highest-barrier, highest-margin work. Package a 24/7 emergency response guarantee for restaurants and hotels where downtime means spoiled inventory, and price that premium accordingly rather than treating refrigeration as a bolt-on.
Install job-costing and dispatch software within the first 90 days if not already in place. Mechanical-services businesses of this size routinely leak margin on labor utilization and truck routing, and tightening technician efficiency by even 10% flows almost entirely to the bottom line.
Build a technician recruiting and apprenticeship pipeline immediately, because the binding constraint on growth in this trade is skilled labor, not demand. Documenting training and cross-training HVAC techs on refrigeration expands billable capacity and reduces key-person risk.
Push geographic and account expansion into adjacent hospitality and fitness chains where the business already has proven experience. Multi-location commercial clients are a repeatable playbook: land one property, then win the portfolio through a single maintenance master agreement.
Review pricing on emergency and after-hours calls to ensure the premium reflects the value delivered. Many owner-run shops underprice urgent refrigeration failures, and simple rate discipline on non-discretionary calls can add points of margin without losing volume.

Diligence notes

Demand the revenue breakdown by service line (HVAC install, HVAC service, refrigeration, maintenance contracts) and by customer segment. The listing claims diversification but discloses no numbers, so verify there is no hidden concentration in one large hospitality client that could walk post-close.
Quantify what portion of the $1.2M cash flow is genuinely recurring versus dependent on large one-time installation and replacement projects. Project-driven revenue is lumpy and does not deserve the same multiple, so this directly affects what you should pay.
Scrutinize the owner's role in sales, estimating, and technical work, since no transition or management-team detail is disclosed. If the seller personally holds the key refrigeration expertise, the master license, or the top commercial relationships, that is significant key-person risk requiring an earnout or extended transition.
Confirm licensing, EPA certifications, and bonding transfer cleanly, and verify the technician headcount, tenure, and compensation. In this trade the crew is the asset, so understand turnover, whether techs are cross-trained on refrigeration, and any non-compete or retention exposure.
Clarify the real estate and equipment situation. The listing shows 'Real Estate: Owned' but 'Not Disclosed' on inclusion, so determine whether the property is part of the $5M price or a separate lease/purchase, and confirm the condition and value of the service fleet and tools.

Source

Originally listed on BizBuySell. View original listing →