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The private equity trend in the HVAC industry is continuing. To help HVAC contractors navigate this process, the ACHR NEWS talked with Tom Robeson, former owner of Engineered Heating and Air. He recently sold his company to Leap Partners. Robeson talked about the process and what contractors should know.

Tom Robeson with the Engineered Heating and Air Team.

The ACHR NEWS: Share with us a little bit of your HVAC background and your company, Engineered Heating and Air.

Robeson: Engineered Heating and Air started in 1996 and was focused primarily on new construction. Over the years, our company grew into a full-service heating and air conditioning company and has served the community of Lexington, Kentucky, for over 27 years. We’ve concentrated on client satisfaction — both internal and external clients — and I am proud to say that we have been awarded the Angie Super Service Award for the past 11 years.

The ACHR NEWS: At age 55, it sounds like you were not thinking about selling. What changed your mind?

Robeson: I had grown my company as much as I could. I needed help to take my company to the next level. I never thought about selling or felt the need to plan my exit strategy, but I worked countless hours and long nights, and my workload was close to capacity. I changed my mind about the possibility of selling when I thought about my quality of life. After speaking with friends in the industry, I warmed up to the idea and started doing research on potential buyers.

The ACHR NEWS: How do you decide who to sell to? Since the company means so much to you, I assume it is about more than just money.

Robeson: Absolutely. Selling my company was no easy decision. We have very low employee turnover and pride ourselves on having loyal, happy customers. We worked so hard to be a trusted company in the community, and that means more to me than money. I didn’t want selling my company to change any of that.

After my initial phone call with Leap Partners, I felt they were straight shooters who cared about their people. I appreciated how transparent and thorough they were from the beginning. They took the time to understand my company. My goal was to partner with someone who would provide new opportunities for my employees and would take care of them and my customers. I liked how Leap Partners worked with former owners. They provide resources and opportunities for companies like Engineered Heating and Air, rather than dictate how things should be done. I wanted to maintain my customers’ and employees’ happiness, and I think the minimal disruption was key in the seamless transition of ownership.

The ACHR NEWS: Why do you think private equity and investors are interested in HVAC contracting businesses?

Robeson: The HVAC business is a great business. People rely on us for services and products that are very important to their everyday life. I’m not sure they’d give up their iPhone before their furnace, but I’d say their furnace or air conditioning ranks near the top. If you look at our industry, typically the HVAC owner starts as an apprentice, then gains technical knowledge and skill. Eventually, they may venture out and start their own business. I think, in the right situation, an investor can bring tremendous value financially, administratively, and help with business operations and growth — ultimately allowing the owner to focus on the trade, which is the real reason they got into the business in the first place.

The ACHR NEWS: How painful is the process of getting your business ready to sell? What should HVAC contractors focus on?

Robeson: I was fortunate to have run a clean business and kept our books in order, so that was the easy part. We didn’t have any debt and avoided unnecessary expenses. I would be lying if there wasn’t some pain — mainly with the details of financial reporting and key metrics. We had low overhead in operations, so some of the financial key metrics we were having to generate for the first time ever.

My advice to owners would be to make your business as appealing as possible. Prioritize and offer service agreements to customers. This shows potential buyers that you have a strong, loyal customer base. Clean up any outstanding debt or anything out of the ordinary. Most importantly, make sure your staff really likes working with you! When you transition over the business, you will need to rely on the relationships you’ve built over the years to make sure your employees and customers know they will be in a better place with more opportunities under new ownership.

The ACHR NEWS: How long does the process take?

Robeson: The process is detailed and can move pretty quickly. From our initial conversations with Leap Partners to the close of the deal was around four months. After the transition, it took around three months for everything to settle back to normal. That was mainly due to implementing an updated software system and other benefits like direct deposit.

The ACHR NEWS: How did you make sure all your employees were taken care of?

Robeson: In our case, it didn’t seem to be that difficult because, through my interview process with owners of past companies Leap Partners had acquired, they all said Leap Partners bent over backward to take care of them and their staff. Most importantly, when I talked with former owners, they reassured me that Leap still allowed them to run their business with a similar level of autonomy as they had before. I was relieved that I wouldn’t have to jump through any hoops to continue to take care of my employees.

The ACHR NEWS: Are you staying on with the company or sailing off into retirement? Why did you make that decision?

Robeson: I am planning on staying for at least five years. That was at Leap Partners’ request, and that made me feel that they were serious about wanting to grow Engineered for the long term. I am too young to retire, but it feels good to have an exit strategy lined up. I really love what I do. I like the interaction — the fellowship and camaraderie we have every day. I like meeting with our customers and helping solve their problems.

The ACHR NEWS: What advice would you share with a contractor who is contemplating selling?

Robeson: Do your research. Find a buyer who will complement your strategy and align with the future you want for your business. Make sure they have the same mindset and beliefs that you built your company on. It spoke volumes to me that Leap Partners had a long list of references for me to reach out to. Selling my company was not an easy decision. Take your time and find the right fit.