Mechanical Fabrication Services, 30-Year HVAC & Sheet Metal Contractor (NY)

$4.1M

Revenue

$1.1M

SDE

1.8x

Multiple

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Full Editorial Writeup

This is a nearly 30-year-old mechanical contracting and fabrication business serving high-end residential builders and light commercial clients. The company self-performs its work with a 17-person crew and runs in-house sheet metal fabrication, meaning it controls both the labor and the custom ductwork/metalwork rather than subbing it out. That vertical integration is unusual at this size and typically translates into better margins and tighter quality control.

The revenue picture needs clarification: the listing header shows $4.1M while the narrative references $3.5M. Either way, at roughly $1.12M of SDE, this is a genuinely profitable operation with margins in the high-20s to low-30s percent, which is strong for mechanical contracting. The business sits in a niche (high-end residential plus light commercial HVAC/mechanical) where relationships and craftsmanship beat price, and the three-decade track record of repeat builder relationships is the real asset here.

At a $2.0M ask against $1.12M SDE, this prices at 1.79x, well below typical mechanical contractor multiples of 2.5x to 4x. That discount is almost always a signal: either customer concentration, owner-dependence, a declining backlog, or a revenue figure that does not hold up. The job of diligence is to figure out which, because a durable self-performing mechanical shop at under 2x earnings is a buy if the story checks out.

Why we like it

Earnings quality is the headline: roughly $1.12M of SDE on $3.5M to $4.1M of revenue is a 27% to 32% margin, which is excellent for mechanical contracting and reflects the in-house fabrication capturing margin that competitors sub out. The 1.79x multiple means you recover your equity fast if the cash flow is real and transferable.
The moat is the 30-year book of repeat relationships with high-end residential builders. In that segment, builders stick with the mechanical sub who shows up, delivers quality, and does not blow schedules, so switching costs are relational rather than contractual but very real. Three decades of survival through multiple housing cycles is itself a proof of durability.
HVAC and mechanical work is genuinely recession-resilient on the service and replacement side, and even new-build high-end homes tend to hold up better than entry-level during downturns because the buyers are less credit-sensitive. Essential climate control is non-discretionary once a project is committed.
A self-performing 17-person crew plus in-house sheet metal fabrication is a hard-to-replicate operational package. Skilled HVAC and fabrication labor is scarce and expensive to assemble, so acquiring an intact, trained crew and shop is worth a premium over starting cold or buying a broker-only outfit.

How to improve it

Add a recurring maintenance and service agreement program on top of the installation business. Every high-end system this crew installs is a candidate for an annual service contract, which converts one-time project revenue into a predictable, higher-margin base and boosts the exit multiple materially.
Reconcile and then lean into the revenue mix within the first 90 days by mapping gross margin by job type (residential new-build vs. light commercial vs. fabrication-only). Shift crew time toward the highest-margin, most repeatable work rather than chasing top-line volume.
Formalize the builder relationships into preferred-vendor or master service agreements where possible. Even informal annual commitments reduce the key-person risk of relationships living in the seller's head and make the customer base diligenceable for your own eventual exit.
Sell the in-house fabrication capacity as a standalone service to other contractors during slow periods. The sheet metal shop is a fixed-cost asset that can generate fill-in revenue by cutting custom duct and metalwork for third parties, improving utilization.
Invest in a field project management and estimating system if the business still runs on spreadsheets and the owner's memory. Standardized bidding, scheduling, and job costing protect margins as you scale and remove the owner as the bottleneck.
Build a documented hiring and apprenticeship pipeline for the crew. Skilled labor is the binding constraint in this business, so securing a repeatable way to train and retain techs directly determines how much you can grow beyond the current 17 people.
Explore a modest geographic or adjacent-service expansion (plumbing, controls, or light commercial retrofit) using the same crew infrastructure and builder relationships. Cross-selling adjacent trades into an existing trusted relationship is the cheapest growth available.

Diligence notes

Resolve the revenue discrepancy immediately: the listing shows $4.1M in the header but $3.5M in the narrative. Pull three to five years of tax returns and financials to confirm actual revenue, verify the $1.12M SDE, and understand what owner add-backs are baked into that number.
The 1.79x multiple is well below comparable mechanical contractor pricing, so interrogate why. Dig for customer concentration (how much revenue comes from the top three builders), any declining backlog, pending warranty or liability claims, or an owner who personally holds the key relationships and estimating function.
Quantify owner dependence directly. Understand who sells, who estimates, who manages crews, and who the builders actually call. If the seller is the rainmaker and lead estimator, build the transition, training, and retention plan into the deal structure before closing.
Verify the crew and licensing situation. Confirm the 17-person crew is W-2 and intact, check that required HVAC and mechanical licenses can transfer or be replaced, and assess wage rates against market so you understand labor cost risk and retention exposure post-close.
Examine the backlog and pipeline. Request signed contracts, open jobs, and the forward bid list to confirm revenue does not fall off a cliff after the sale, and understand the seasonality and cash-flow timing of project-based work including progress billing and retainage.

Source

Originally listed on Rejigg. View original listing →