Mid-South Mechanical Contractor, Federal Set-Aside HVAC & Piping, Est. 2008

$18.5M

Revenue

$1.6M

SDE

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

This is a commercial and industrial mechanical contractor based in the Mid-South, doing HVAC, mechanical piping, chiller and cooling-tower replacement, boilers and pumps, controls upgrades, retrofit work, and emergency repairs. Jobs range from same-week service calls to multi-million-dollar mechanical construction contracts across the Southeast. Customers span federal agencies, healthcare and institutional facilities, universities, general contractors, and private commercial clients. Founded in 2008, it did $18.5M in FY2025 revenue with roughly $1.64M in normalized EBITDA and posted 48% revenue growth from FY2023 to FY2025.

The real differentiator here is the federal channel. The company holds small-business set-aside certification and sits on two multiple-award task-order contract vehicles with five-year option structures, giving a buyer a standing pipeline of government work. It carries $21.7M of awarded backlog across 37 projects, about 1.18x trailing revenue, which is unusually strong visibility for a contractor this size. Field operations run through an operations manager, three superintendents, and four foremen, while the two co-owners handle estimating, project selection, and senior customer relationships.

The business is asset-light on real estate: crews mobilize from a base with no leased premises and no property in the deal, and only about $250k of equipment and vehicles is included. Management reports $6M single-project bonding capacity and up to $20M subject to surety approval, though that capacity is tied to current ownership and not represented as transferable. The stated growth constraint is estimating and project-management bandwidth, not demand, since the company passes on public bids weekly and turns away readily available MRO and emergency-service work.

Why we like it

Earnings quality is anchored by $21.7M of awarded backlog across 37 projects, roughly 1.18x FY2025 revenue, which gives a buyer real forward visibility rather than a hope-and-pray pipeline. Combined with $1.64M normalized EBITDA on $18.5M revenue and 48% revenue growth over two years, this is a genuinely growing book of contracted work.
The moat is the federal channel: small-business set-aside certification plus two multiple-award task-order vehicles with five-year option structures create protected bid access that competitors cannot easily replicate. Management even reports solicitations where the company is the only bidder, which is about as clean a competitive position as a contractor gets.
Market tailwinds are structural and defensive. Demand is driven by aging mechanical infrastructure in federal, healthcare, higher-ed, and industrial facilities where equipment must be replaced while buildings stay occupied, and this need does not disappear in a downturn.
The operator advantage is stark: the binding constraint is estimating and project-management capacity, not demand. The company turns away public bids and readily available MRO and emergency work every week, so a buyer who adds a couple of estimators and PMs can convert visible opportunities into revenue quickly.
The cost structure is attractive. With no leased premises, no real estate, and value sitting in the workforce, award history, and mobile equipment, fixed overhead stays low and margins are less exposed to occupancy costs than typical contractors.

How to improve it

Hire additional estimators and project managers within the first 90 days to attack the stated bandwidth constraint. Management fields multiple public bids weekly and passes on work it cannot staff, so bench strength converts existing visible demand directly into booked revenue without new marketing spend.
Stand up a dedicated MRO and emergency-service line. Calls already arrive several times a week and ownership has deprioritized this work, yet recurring maintenance, repair, and emergency revenue smooths the lumpiness of project work and builds a stickier, higher-margin base.
Aggressively work the two multiple-award task-order vehicles. These are standing federal channels with five-year option structures, and a disciplined task-order response process can pull a steady stream of government work that competitors without these vehicles simply cannot bid.
Resolve bonding transferability before or at close. Current $6M single-project and up-to-$20M capacity is tied to existing ownership; securing a surety relationship under new ownership protects the ability to bid the larger institutional jobs that drive the backlog.
Broaden the customer mix using the existing field bench. Point crews at university, healthcare, general-contractor, and private commercial work to reduce federal concentration and capture higher-margin private jobs that do not carry set-aside constraints.
Build a service maintenance agreement program on completed installs. Turning chiller, boiler, and controls installs into recurring maintenance contracts creates predictable revenue and a durable customer relationship that supports future replacement work.
Tighten job-costing and estimating discipline as headcount scales. Adding estimators only pays off if bid quality holds, so implement standardized costing, win-rate tracking, and margin gates to avoid buying revenue at unprofitable prices.

Diligence notes

Scrutinize the $21.7M backlog line by line: confirm which of the 37 projects are firm awards versus options or estimates, verify contract values and completion timelines, and check margins by job. Backlog is only valuable if it is actually contracted and profitable.
Investigate the federal set-aside certification carefully. The listing references both small-business set-aside and SDVOSB status; confirm the exact certifications, whether they survive a change of ownership, and how much revenue depends on them. Loss of set-aside eligibility post-close could gut the moat.
Verify bonding capacity transferability. Management explicitly states the $6M to $20M capacity is tied to current ownership and not represented as transferable, so quantify how much backlog and future bidding depends on bonding a new owner may not immediately have.
Assess owner dependence in estimating and customer relationships. Both co-owners focus on estimating, project selection, and senior customer relationships, and estimating is the stated bottleneck. Understand how quickly a buyer can replace this function and how key relationships transfer.
Normalize the EBITDA and examine working capital. The listing cites a 'selected normalized EBITDA' of $1.64M, so review the add-backs, and given growing project backlog, model the working-capital and cash requirements carefully since progress billing and retainage can strain liquidity fast in construction.
Confirm the asset schedule and revenue concentration. The $250k equipment figure is a seller estimate, so validate the actual fleet and tooling, and analyze customer and agency concentration to gauge how exposed revenue is to any single federal contract or client.

Source

Originally listed on BizBuySell. View original listing →