Jim Abrams and John Young, familiar names in the hvacr industry as co-founders of Contractor’s Success Group and Service Experts, Inc., have added another page to their rÃ©sumÃ©s with the founding of Wealth Now!, a sales brokerage and its “$2 million business model.”
VenVest is the parent company of AirTime 500, Plumbers’ Success International, and Clean Indoor Air. Among these groups are contractors who are looking to sell their businesses. That was a good motivation for the founding of Wealth Now.
Wealth Now“We have a relationship with 750 contractors,” said Abrams. “There is a segment of them who want to sell their businesses now instead of later.”
Abrams believes that by readying the businesses for sale and “packaging” them together with other similar businesses in different locations, Wealth Now can offer an attractive package to consolidators looking to acquire and grow into new or existing markets.
Lon Cassel, managing consultant for Wealth Now, said, “It became clear that some contractors were joining PSI and AirTime with the overriding goal of selling their businesses as soon as possible at prices reflecting the true value they had built up — not just the asset value that many contracting businesses sell for.
“We knew that we could find buyers for some of the businesses right away, and that’s why we created Wealth Now.”
Cassel added that the brokerage services are available to VenVest companies as long as the sellers have achieved double-digit profitability and are engaged primarily in residential service. “Some buyers are looking for companies that they can incorporate into existing operations; others are looking for a company that can serve as the platform for future acquisitions,” he said.
$2 Million Business ModelAbrams said the $2 million model, available to AirTime 500 contractors, has at least two distinct benefits to hvacr business and their owners.
“We need to make our businesses more attractive to young people,” he said. “The creation of manageable $2 million businesses creates career opportunities.
“A bright young person would be attracted to a business where they could move into a general manager’s position without having to take the owner’s last name. In this model, a general manager can earn $100,000 a year.”
The second benefit is making a business more manageable. Abrams cited the example of a contractor who is doing $8 million/year and has too much square footage to support the operation.
“The guy could split the business into four $2 million units,” he added. “And, if the owner has three sons, there wouldn’t be a problem of who to give the business to. They could all run their own $2 million business.”
Splitting up a business into smaller units would be a matter of dividing up the markets served by the original company. If one of the businesses then grew beyond $2 million, they’d be able to start up another new unit.
“Now the exceptional guys with the bigger businesses will have an easier way to manage,” Abrams said. “Besides, the guy with the $2 million business is the exception.”
For more information on VenVest, call 800-524-1954; for Wealth Now, call 866-932-5846, ext. 313.
Publication date: 10/23/2000