Buying an HVAC company in Florida

An HVAC company installs, repairs and maintains air conditioning and heating systems, and in Florida that mostly means air conditioning. The work comes in three streams. Service calls are the daily rhythm: a system stops cooling in August, a technician finds the problem, and the customer pays for parts and labor on the spot. Replacements are the big jobs: a new condenser and air handler when a repair no longer makes sense, often financed through a lender the company works with. Maintenance agreements are the steady part. Customers pay a yearly or monthly fee for tune-ups and priority service, which keeps technicians busy in slower months and puts the company first in line when the system needs replacing.

Some companies work mostly in homes. Others serve offices, restaurants and property managers, or install systems in new homes for builders, which is low-margin bid work tied to the housing market. A small company usually has service technicians and installers in trucks, a dispatcher, a service manager and an owner who often still sells replacements.

• A large, growing list of maintenance agreement customers who renew every year: the closest thing the trade has to recurring revenue.
• Most revenue from service and replacements for homes and small businesses, rather than new construction for one or two builders.
• Technicians who stay. A company that keeps experienced people is getting training, pay and culture right.
• Someone besides the owner who can sell replacements and run the day's service calls.
• A licensed qualifier who will stay after the sale, or a clear plan to replace them before closing.
• Records in field service software: past calls, equipment at each address, warranty registrations.
• Trucks and tools that don't all need replacing in the next two years.

The Construction Industry Licensing Board at the Florida Department of Business and Professional Regulation licenses HVAC contractors. The main licenses are air conditioning contractor (Class A, or Class B for systems up to 25 tons of cooling and 500,000 Btu of heating) and the broader mechanical contractor. Certified licenses (numbers starting CAC or CMC) work anywhere in Florida; registered ones work only where the holder met local competency requirements.

You don't need a license to own the company. It contracts through a licensed "qualifier": a person who supervises its work, and its finances too unless the board approves a financially responsible officer (sections 489.119 and 489.1195). The license belongs to that person and can't be transferred. If the only qualifier leaves, the company has 60 days to find another and can't do any contracting in the meantime. At most, the board can let an officer finish jobs already under contract. The company also can't enforce a contract it signed while it had no qualifier (section 489.128).

Settle this before closing: many buyers keep the seller on for a while or hire a licensed manager. A new company formed to buy the assets must be qualified before it contracts. Technicians who handle refrigerant need EPA Section 608 certification, and some counties license journeymen.

• The license itself. Look up the qualifier at myfloridalicense.com: the license should be active, in the right category and in this company's name.
• How many maintenance agreements are active, how many renewed last year, and whether the promised visits actually happen.
• The mix of service, replacement and new construction, by month. Summers are busy; look at January.
• Who sells replacements. If it's the owner, those sales may dip when they leave.
• Warranty costs: the labor warranties the company has promised, and how often it goes back to fix its own installations.
• Technician pay and turnover, and whether the best people have agreed to stay.
• How replacements are financed. If customers borrow through the company's lender, read that agreement and its fees.
• Federal refrigerant rules have been changing. Ask how the company handled the move to newer refrigerants and what older equipment sits in inventory.
• Truck age and condition, and any vehicle leases.

• How many customers are on maintenance agreements, and how has that changed in three years?
• Whose license does the company work under, and would they stay after a sale?
• Roughly how does your work split between replacements, repairs and new construction?
• Who sells replacements now, and how do leads get to them?
• What does a slow month look like, and how do you keep the techs busy?
• How long have your senior technicians been with you, and how are they paid?
• What warranty do you give on installation labor, and how often do you go back?
• Are any supplier rebates or dealer programs tied to you personally?