HVACR News for Informed Owners
Inside This Issue:
• Featured HVACR Transactions
• What Drives Business Value
Generational Equity Advises Wood Air Conditioning in its Sale to The Midway Companies
DALLAS--(BUSINESS WIRE)--Generational Equity, a leading mergers and acquisitions advisor for privately-held businesses, is pleased to announce the sale of its client, Wood Air Conditioning, Inc. to Midway Mechanical Services, a member of The Midway Companies’ family of companies. The acquisition closed on October 12, 2021.
Located in Mount Pleasant, Texas, Wood Air Conditioning (WAC) began in 1957, serving a 4-county area. The Company has grown into one of the largest HVAC companies in East Texas. The Company provides residential and commercial air conditioning installation and service to primarily the Mount Pleasant and Titus County area of Texas. The Company has also completed projects in several other states as well.
Hooper Corporation: Join together with General Heating and Air Conditioning as one company on the new campus
DeForest, WI (November 1, 2021) — Hooper Corporation, the specialty electric power and mechanical contractor headquartered in Madison since 1913, today announced it is moving to a brand-new campus located on 50 acres in DeForest. As part of the move, the strategic decision was also made to combine Hooper Corporation and General Heating and Air Conditioning (GHAC), a wholly-owned subsidiary since 1994, as one unified company and cohesive brand: HOOPER. Effective November 1, teams that previously worked in separate offices and various warehouses will now join together as one company on the centralized campus that includes a new corporate office, a state-of-the-art fabrication facility, and room to grow.
Both built on a long local history and strong reputation of excellence, combining Hooper Corporation and GHAC under one unified brand and location will foster a more efficient and collaborative work environment across all disciplines. The new campus will be home to approximately 200 employees working together from one centralized location to help deliver high-quality utility and mechanical solutions that connect people to the resources they need.
Universal Technical Institute Completes Acquisition of MIAT College of Technology
PHOENIX, Nov. 1, 2021 /PRNewswire/ -- Universal Technical Institute, Inc. (NYSE: UTI), the nation's leading provider of trained technicians to the transportation industry, has completed its acquisition of MIAT College of Technology for a purchase price of $26 million in cash.
The acquisition adds campuses in Texas and Michigan and eight new programs to UTI.
"On behalf of everyone at UTI, I am excited to officially welcome MIAT's management, staff, students, faculty, and alumni to the team," said UTI CEO Jerome Grant. "Completing this acquisition represents an important initial step in executing our growth & diversification strategy. It allows us to further expand our program offerings nationwide into growing fields that we believe will continue to be bolstered by technological advances and the global focus on sustainability. We also expect to realize significant revenue and cost synergies through this acquisition."
Sila Acquires Astacio Plumbing & HVAC - Expands HVAC Platform in New York and Connecticut
PHILADELPHIA, Nov. 2, 2021 /PRNewswire/ -- Sila Services LLC (https://sila.com/) recently acquired Astacio Plumbing & HVAC, adding Astacio's high-quality residential and commercial services to Sila's existing business operation in the country's largest metropolitan region. Since 2004, Astacio Plumbing & HVAC has been delivering award winning installations, repairs and service to residential and commercial customers in Westchester County, NY and Fairfield County, CT. Sila is an HVAC industry leader in customer satisfaction and has been delivering exceptional home comfort in heating, AC, plumbing and electrical services, throughout the Northeast and Mid-Atlantic since 1989.
"With its vast expertise in everything from specialties like hydronic heating and cooling to commercial and residential HVAC and plumbing services, adding Astacio to our operation in this region bolsters our leadership position in a critical market for the Sila platform," said Lou Pellegrini, CEO of Sila. "We're excited about the continued momentum and synergies this combination will bring to our organization and it will allow us to better serve both homeowners and commercial customers across New York and Connecticut."
American Refrigeration Company Acquires Global Mechanical
WILMINGTON, MASS. NOVEMBER 03, 2021 - American Refrigeration Company (ARC), the largest independent commercial and industrial mission critical mechanical services company in New England, today announced it has acquired Global Mechanical Inc. Financial terms of the transaction were not disclosed.
ARC currently serves more than 500 clients across the northeast region of the United States in the food and beverage, cold storage arena, pharmaceutical, and process industries. ARC provides services and maintenance for the operations of food processors, cold storage facilities, critical industrial refrigeration infrastructure and supply chain links
Strikepoint Group Holdings acquires Performance Air Conditioning, Electrical & Plumbing
Newark, DE, USA – WEBWIRE – Wednesday, November 3, 2021
Strikepoint Group Holdings (“SGH”), formerly known as Horizon Group Holdings, has announced the acquisition of Performance Air Conditioning, Electrical & Plumbing of Largo, FL. The ninth acquisition of 2021 for Strikepoint Group Holdings (“SGH”). Performance Air Conditioning, Electrical & Plumbing was represented in this transaction by HVAC business broker Patrick Lange with Business Modification Group, Horseshoe Beach, Florida.
Performance was founded in 1959 as a residential HVAC company and expanded into plumbing and electrical work several years ago to leverage the economic growth of the region and an increase in club memberships.
“Dad and Grandad learned refrigeration in the Navy,” said Terry Stables, the third-generation owner of Performance. “They said the HVAC guys seemed to be the cleanest on the job.” To grow and promote the business Stables continued to rely on extended family to print door hangers and yard signs.
What Drives Business Value
By Jay Carter, Founder and CEO, MarketView
It’s important to understand what a business is worth, and it’s equally important to understand what drives the value the business, and it’s not all about EBITDA. I valued a food manufacturing business recently that was worth 5 X EBITDA. Two weeks later, I valued another food manufacturing business that was similar in size. It was worth 9 X EBITDA. Why such a big difference?
EBITDA is only one indicator of value. My “5X” client had a good, stable business that manufactures organic fruit pies and incredible scratch-made cakes. The business is well known in the area and has a strong and loyal customer base. With sales of $19 million per year, this business generated $2.1 in EBITDA, resulting in a valuation of $10.5 million. Nice business!
My “9X” client looked similar on the surface. This business also produces baked goods. Theirs were made from organic and non-GMO ingredients, a number of which were gluten-free. While not precisely the same products as the 5X client, they are not that different. In fact, the two companies’ gross profit margins were almost identical. But the 9X client was valued at (and subsequently sold for) $17.5 million! How can we explain that?
The difference was that the 9X business had more things going for it that buyers value, and the valuation multiple reflected it. Comparing the two side-by-side, the distinctions are clear.
Both clients built great businesses, but the 9X client was very strategic in how they grew. The 5X client tended to respond to growth opportunities as they showed up. The 9X client knew in advance that buyers of businesses like theirs valued product and customer diversification, strong sales growth, and a solid management team. The 5X owners worked just as hard and produced equivalent sales and EBITDA, but they overlooked other important drivers of value for buyers in the industry.
My friend Jeffrey Slater at The Marketing Sage says this about building value with a well-developed and executed marketing strategy,
Are you growing your business with a buyer in mind? If you are interested in knowing what this could look like for your business, send me an email or give me a call and let's talk about it.
I have worked with hundreds of business owners like you and helped them increase the value and salability of their business.
Contact Jay Carter at jcarter@market-view.com or 704-904-7543
This Issue of the Exit Insider is Sponsored by MarketView.