Industry guide
Home services: HVAC, plumbing and electrical
Steady demand and recurring maintenance make these businesses attractive. The risk usually sits with licenses and the people who hold them.
What drives value
- Maintenance agreements. Customers paying for annual or seasonal tune-ups produce recurring revenue and a steady source of repair and replacement work. Count active agreements, renewal rates and revenue per agreement.
- Mix of service, repair and replacement. Replacement jobs are large; service keeps the phones ringing. A healthy mix is less volatile than one dominated by new construction.
- Technician bench. Experienced, licensed technicians are scarce. A stable team is worth a lot.
- Call handling and booking. How many inbound calls become booked jobs is a direct driver of revenue. Ask for call records and booking data if they exist.
Where the risk hides
- The license holder. In many states, the business operates under a master or contractor license held by a person, often the owner. If the owner leaves and no one else qualifies, the business may not be able to operate legally. Confirm requirements with the state licensing board early.
- Key technicians leaving after the sale.
- Seasonality. HVAC peaks in summer and winter. Cash can run thin in shoulder seasons.
- Vehicles and tools. Trucks are a large ongoing cost. Inspect them and build a capex reserve.
- Warranty and callback obligations on past work.
- Builder concentration if a large share of revenue comes from a few contractors.
Questions to ask
- Who holds each license, and how will licensing work after closing?
- How many active maintenance agreements are there, and what is the renewal rate?
- What is revenue per technician, and how long has each been with the company?
- What share of revenue comes from the top five customers or builders?
- What are warranty and callback costs over the past three years?
- What does monthly revenue look like across three years?