AUSTIN, TX — The consolidation business has a new member in its midst — and this one is making a big, Texas-style splash. Although its primary focus is on plumbing contractors, it is counting on the hvac portion to play a big “supplemental role” — approximately $150 million in the first year.

American Plumbing and Mechanical (AMPAM) Inc., Round Rock, TX, formed last April, has acquired 12 plumbing and hvacr contractors with combined 1999 revenues of more than $500 million. The contractors represent both residential and commercial markets.

“Our focus is going to be primarily on plumbing contractors,” said Stephen Smith, treasurer of AMPAM. “The hvac portion represents about 15% of our business.”

Going public

Smith said AMPAM expects to double in size to $1 billion in revenues by next year and will be preparing for its initial public offering (IPO) then.

In a statement to the Austin Business Journal, Smith said his company’s goal is to go public. “One of the aspects of consolidating a business is to give it liquidity in stock,” he said. “We would start looking at it early next year, as soon as the year is complete.”

AMPAM is considering contractors with revenues of $10 million or more. Smith said there was a reason for that.

“Once they become part of the company, there’s more financial reporting than these guys are used to,” he said. “These are companies that are well-known. One mistake other companies make is to buy poorly managed companies and put operational control on the parent.”

AMPAM has acquired contractors in Arizona, California, Florida, Georgia, Ohio, and Texas, employing about 4,000 people. Its plans include penetration into many new national markets.

“We want to be a national consolidator,” said Smith. “We are looking at good demographics, and in areas that are not affected by national trends.”

Smith is counting on the average of 30-plus years of experience by acquired contractors to spread the word about AMPAM to other contractors. He said his company is using third-party marketing campaigns to attract contractors.

Although AMPAM is not concentrating too heavily on the hvac market, it will not rule out further acquisition if the business mix is right.

“If the contractor is consistent with our business plan, we’ll take a look at him,” Smith said. “There seems to be plenty of people right now in the national hvac business.”

Is Smith leery of going public since hvac consolidators have seen poor performance in their stocks? No.

“They [hvac consolidators] have not expected earnings,” he said. “We hope we will.”