Let’s face it: no one can work forever. After years of building and managing your HVAC business, you will have to pass the baton to a successor at some point. As the baby boomers generation ages, it’s a cold hard fact that many contractors can no longer keep up with the ever-changing demands of the Read more
HVAC
Let’s face it: no one can work forever. After years of building and managing your HVAC business, you will have to pass the baton to a successor at some point.
As the baby boomers generation ages, it’s a cold hard fact that many contractors can no longer keep up with the ever-changing demands of the heating and cooling industry. Today, owners of HVAC and other contracting businesses are retiring in droves to move on to the next chapter of their lives. Couple that with record-breaking levels of merger and acquisition (“M&A”) activity in the HVAC sector, and owners have many considerations and opportunities to consider when succession planning.
How prepared are you for that big day in your future?
In today’s dynamic business environment, managing risks associated with planned and unplanned departures is a business imperative that contractors can no longer afford to ignore. Decades-old, highly successful and well-established HVAC businesses, in particular, need proactive succession planning to ensure continued business growth.
Succession planning, however, can be a complex undertaking. It involves identifying and training your successor to ensure your retirement does not disrupt operations. Additionally, it requires creating a robust strategy to maximize the business’s economic value during the ownership transition and manage any taxation and compliance implications. Succession planning also includes considering M&A options for your business.
Throughout the years, we’ve seen how the lack of a well-thought-out succession plan has led to severe financial damages for many HVAC companies. With this in mind, businesses must develop long-term strategies to mitigate risks and ensure a successful transition.
The Importance of Succession Planning for Your HVAC Business
Whether you have no plans of retiring anytime soon, the future is unpredictable. Having a solid, documented succession plan is crucial to your business’s health and fate.
Succession planning allows you to:
- Ensure your management team is aligned with your plans and goals for the company’s future.
- Stay focused on a long-term, bigger-picture vision for the business.
- Protect the business in the event of a sudden major life-changing event.
- Assess parts of your business that may need special attention for your succession plan to be effective.
No matter the size or structure of your contracting business, having a defined succession plan is critical to selecting and developing the best leaders. Extending tenures may prevent the impending headwind, but there is no substitute for a viable long-term succession strategy. After all, business leaders, irrespective of their stature, would inevitably need to make way for the younger generation.
3 Insightful and Actionable Succession Planning Steps
Every business situation requires a different exit strategy. Some existing business owners may want to step out of their position for good. While some would prefer to stay minimally involved to ensure the company’s future success.
Whether you plan to pass your company on to one of your children or trusted employees or sell it to an outside party, succession planning is paramount.
Here are three important things to consider as you plan for your HVAC business succession:
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Decide Who Will Take Over
Identify who will take the reins when you retire, and give them the opportunity to develop their skills and experience to successfully replace you in the future. Every aspect of business operations should be clearly defined, including detailed role definitions for key decision-makers at various levels. This is especially true for family-owned businesses.
With any luck, you’ve had capable family members or employees who have established themselves in the specific roles they will eventually assume.
If your business is family-owned and operated, it is important to talk to your family members before making succession choices. Ask them if they are interested in taking over the business, and determine if they have the capability to effectively run the company.
Starting your succession plan sooner rather than later gives you more time to hone the knowledge and skills they will need to take over.
On the other hand, if you’ve been anticipating that one of your employees will buy out your business, make sure they have the financial capacity to give you market value for your business along with the skills to sustain its success. Internal transfers are often structured where the owners are paid over time through the profits of the business, so it is important to really assess if your successor has the skills to run the company profitably without you going forward. Otherwise, you’re giving your business to someone who can put your long-term financial security at risk if they cannot execute successfully. This is why many business owners look to third-party M&A to transition their business.
As retirement looms, you must also train them to do the jobs well to ensure that a steady hand will lead from the top down.
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Determine When the Transition Will Happen
You can’t just flip a switch and hand over the job to your successor with little notice. Think long-term and set a date for your last day in the company. The ownership transition should begin before your last day to give your successor enough time to get accustomed to their new role.
As the existing business owner, you must also invest in the professional development of your succession choice to help them gain valuable experience and boost their soft skills. Let them assume different responsibilities to assess where they might need some additional training and development.
If you’re in a position where you don’t have a qualified candidate to take over, then you need to craft a broader succession plan that enlists a third party to purchase the business. Make sure to find a buyer who values your business the way you do, has the ability to demonstrate consistent earnings and will continue its legacy when you are no longer there.
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Consider a merger and acquisition (M&A)
When one entity buys another entity and folds it into their organization, that is referred to as an acquisition. In a merger, two equal companies join to form another entity or co-branded company. The timing has never been more perfect for HVAC businesses to consider M&A. More investors are looking for lower-middle-market organizations for M&A activity, and the benefits to you, as a small business owner, are immense.
Rewarding financial returns are one of the reasons business owners turn to M&A. During an M&A, you’ll be able to enhance the price you receive for your company, allowing you to cash in on your hard-earned success and retire with ease. There are also opportunities to create generational wealth by selling portions of your business to a private equity firm. In this scenario, you are able to continue investing, you stay involved in running your company, and you work with the majority owner to generate increased value for your business. Eventually, you’ll be able to liquidate your equity at a larger amount in this second sale of the business.
If you are interested in M&A, it’s never too early to start planning. Price isn’t the only thing to focus on. From determining timing, better understanding your customer relationships and determining what to do with your team, there are seven things to consider when selling your company.
Ignite A Big-Picture Mindset
Changes in the HVAC business happen fast. But through effective succession planning and considering M&A options, you can ensure business continuity. Don’t forget to call in the experts for help with your company’s succession planning. Look for a team with many years of experience, diverse business background and a proven track record in the M&A industry.
Need help with your company’s succession planning? The experts at Align BA are happy to advise you on the best way to create a strong leadership pipeline.
About the Author: Dena Jalbert is at the forefront of executive leadership within the M&A industry. She is also an award-winning entrepreneur, a mother and a philanthropist. Dena is an outgoing, high-performing, and deeply analytical leader who is passionate about driving business growth through financial discipline, innovation and creativity. Dena is a proven leader whose distinction interlaces a wider-view of business needs to connect the dots between data and business growth strategy. It is this unique strength that has led to repeated successes throughout her career, enabling a different and fresh perspective in building and leading organizations — utilizing innovative strategies to deliver transformations in operations and business results. As a mother of two young girls, Dena is determined to do what she can to advance the opportunities of young girls and women throughout Central Florida.
The International Association of Plumbing and Mechanical Officials (IAPMO) was pleased to have participated in the Plumbing and Heating event at WorldSkills Competition 2022 Special Edition (WSC2022SE), Nov. 2-4 at GROHE Technikum in Lahr, Germany. The competition showcased national champions from 20 WorldSkills member countries. IAPMO CEO and World Plumbing Council (WPC) Deputy Chair Dave Read more
The International Association of Plumbing and Mechanical Officials (IAPMO) was pleased to have participated in the Plumbing and Heating event at WorldSkills Competition 2022 Special Edition (WSC2022SE), Nov. 2-4 at GROHE Technikum in Lahr, Germany. The competition showcased national champions from 20 WorldSkills member countries.
IAPMO CEO and World Plumbing Council (WPC) Deputy Chair Dave Viola relished the opportunity to present medals to the winning champions, concluding a thrilling three-day competition at the celebratory closing ceremony on Saturday, Nov. 5. Viola was joined by IAPMO Chief Administrative Officer and WPC Secretariat Gaby Davis, as well as IAPMO President David Gans and Vice President Steve Panelli, both experiencing a WorldSkills competition for the first time.
Plumbing and Heating competitor Florian Bliem of Austria captured the gold. Joint silver medals were awarded to Tom Pean of France and Marton Offner of Hungary, and the bronze medal was won by Tai-Yu Chen of Chinese Taipei.
Dave Viola
Indicative of the high standard of this year’s long-awaited, rescheduled competition, six additional entrants were awarded medallions for achieving a final assessment above WorldSkills’ benchmark for excellence: Sangyeop Kim (Korea), Saku Hurtig (Finland), Luca Herzog (Switzerland), Connor Cruden (United Kingdom), Fabian Grün (Germany), and Yuto Itahashi (Japan).
“What we are seeing today at WorldSkills is the best of the best, showcasing their skills and inspiring other people to do their best quality work,” Gans said. “We are looking at the future of plumbing, and plumbers. These are the young men and women who are going to take plumbing to the next level and help change the world.”
The event also showcased a new Plumbing Champions training activity, sponsored by the World Plumbing Council and delivered by the International Water, Sanitation and Hygiene Foundation (IWSH), charitable arm of The IAPMO Group. Three young students, accompanied by one mentor and one interpreter — all from Ukraine — were sponsored to participate in an educational workshop completing the same test project as was tackled in the WorldSkills competition, guided and supported by technical experts from IAPMO and GROHE.
Mayor of the city of Lahr Markus Ibert paid a special tribute to the Ukrainian group in his closing remarks.
“I would like to thank all participants who made this special event possible, and I wish you all the best for your ongoing life; success, and peace — especially to our guests from Ukraine. To you, to your families and your neighbors, have a good time, in peace, and with benefits, for a good life.”
The biennial WorldSkills international competition returns in September 2024, where it will be hosted in Lyon, France.
For more information about WorldSkills, visit https://worldskills.org/.
While he’s not busy with his day job working on hydronic heating systems, commercial and residential plumbing, backflow prevention and gas work, Chris Massaro (@nwo_plumber) loves playing guitar and recording music. Admiring the recent tattoo to commemorate his daughter’s birth, “I was in a bunch of bands throughout high school and recorded an album once Read more
While he’s not busy with his day job working on hydronic heating systems, commercial and residential plumbing, backflow prevention and gas work, Chris Massaro (@nwo_plumber) loves playing guitar and recording music. Admiring the recent tattoo to commemorate his daughter’s birth, “I was in a bunch of bands throughout high school and recorded an album once. I don’t get around to it as much as I used to or like to, but I’m definitely making more time for that now,” says Massaro, owner/lead tech at Aqua North Plumbing and Heating Ltd., Thunder Bay, Ontario, Canada.
I take that back. Massaro also enjoys hanging out with friends and family, golfing and mountain biking. And, he definitely needs to get that grill time in—grill, smoke, BBQ. “Sometimes in that order, in one cook. Most of the time I do use the smoker though. I’ve been on a pulled pork kick lately. My favorite is some nice pork shoulders on the Traeger. It’s the ultimate dad activity, in my opinion,” says Massaro.
The work\life balance has been a struggle for Massaro; he realized one day that when you are running your own small business sometimes there isn’t a balance. You have to make the time and prioritize it. “Do what’s important to you and make time for the people and activities you love. And most importantly, take care of yourself! Because you’re worth it. Time stands still for no one so spend it wisely,” says Massaro.
And that’s why staying physically fit and active is important to Massaro. “I’m always lifting, bending, up and down the stairs all day so it’s helpful to have a training regimen that supports that. And, it really helps to keep me in mental shape as well,” say Massaro.
Even more important is eating right, says Massaro. “We use a lot of energy in a day in the trades so we have to keep that fire fed. All of this allows me to stay energized all day and still have plenty of gas in the tank when I get home for family time,” continues Massaro.
Massaro’s foray into the trades started when he starting working for the family business as a plumbing apprentice at the age of 13. “Made best friends with my shovel and we went to work. Thankfully, I graduated from digging trenches and went on to start really learning about the ins and outs of the trade,” recalls Massaro.
Over the next few years, Massaro spent most days plumbing residential systems with a few commercial jobs sprinkled in here and there while working for my father. “It was nice to be doing a bit of everything and not just strictly one area of the trade, which I felt was important to be a well-rounded tech.
Once Massaro had a few years under his belt, he did a lot of remote northern work for fly-in communities. “Those big jobs we did up there really sharpened my time and material management skills,” says Massaro.
In addition, the high school Massaro attended offered a cooperative education program where he was able to gain work experience hours toward his apprenticeship if he chose to stick with plumbing. “I would go to regular classes for the morning periods then co-op at Aqua North in the afternoon,” says Massaro.
As a side note, Massaro says that if your local high school offers a cooperative education program, he highly recommends getting involved. “It’s a really pressure-free way to get your feet wet in whatever trades the school offers,” says Massaro. “I always try to take on one co-op student per year and leave them with a positive experience in the trade. I feel that’s the best way for kids to feel out what they want to do. And, don’t be afraid to ask questions!”
Next, after getting all of his trade school and work hours complete, Massaro then wrote his exam for his certificate of qualification in plumbing. Shortly thereafter, Massaro bought the family business, and the rest is history.
As fourth-generation plumber, Massaro has had some great mentors in his career, with plenty of help and guidance from his father and grandfather in learning new and old ways of plumbing. “If my great grandfather was around then I’m sure he would have some real old school stuff to show me.”
And while Massaro doesn’t consider himself a role model, he’s always willing and ready to help others to do their best at work, and life in general. “I’ve learned a lot over the years and sharing the experiences and knowledge with up-and-coming tradespeople is paramount,” says Massaro.
For Massaro, he loves building something from nothing and executing the job. “Sometimes just sitting back after the job is done and being like ‘damn we really did that.’”
Perception Change
The perception of the industry needs to change, says Massaro. “I think the wheels are turning on that as we speak but we’ve got a long way to go.”
Social media is that vehicle for the instrument of change as it’s an easy way to showcase contractor work, and connect with other professionals. “There’s a solid amount of tradespeople out there doing an amazing job. If we can show people that there’s more to plumbing than just plunging toilets, fixing leaks, and back-breaking work, then I think that’s a win,” says Massaro.
Whether it’s new and better tools, techniques, business knowledge, etc., Massaro has learned so much on social media. “It’s awesome that we can connect with people and have such a great community sharing tricks of the trade, meet-ups or even debate if it’s tape then dope—which it is—or dope then tape,” says Massaro.
In the end, as Massaro sets his sights on his career and further enriching his life, a good bucket list item to check off would be getting a recreational pilot’s license. “Always wanted to get into aviation in some way.”
The sky’s the limit.
While endorsements and referrals are used in the early process to narrow down selections, homeowners look at logistical considerations before making their final hiring decision. And, according to Lowe’s State of the Pro report, price is almost always a top factor for homeowners, with availability to start and final written bid coming in close behind Read more
While endorsements and referrals are used in the early process to narrow down selections, homeowners look at logistical considerations before making their final hiring decision. And, according to Lowe’s State of the Pro report, price is almost always a top factor for homeowners, with availability to start and final written bid coming in close behind. Learn more about homeowners’ expectations and how to meet them here.
Service Experts Career Academy (SECA) is partnering with the National Center for Construction Education and Research (NCCER) to offer a debt-free path to a lifelong career as an HVAC technician or plumber. The SECA program is training dozens of apprentices across the country to meet the growing demand for HVAC technicians and plumbers. According to Read more
Service Experts Career Academy (SECA) is partnering with the National Center for Construction Education and Research (NCCER) to offer a debt-free path to a lifelong career as an HVAC technician or plumber. The SECA program is training dozens of apprentices across the country to meet the growing demand for HVAC technicians and plumbers. According to the U.S. Bureau of Labor Statistics, 401,100 job openings for HVAC technicians are expected every year for the next decade. After a positive response to the HVAC training program, SECA and NCCER will also train aspiring plumbers beginning January 2023.
Service Experts welcomes any applicants interested in starting their professional careers debt-free. While trade schools, four-year colleges, associates degrees and other hands-on training programs can cost $7,000 or more annually, SECA pays HVAC apprentices throughout all four years of the training program, while giving them virtual, hands-on and ride along learning opportunities.
“We are opening our doors to anyone interested in taking that first step,” says Tom Essing, a SECA technical trainer in Michigan. “Whether you have prior experience or are a fresh mind with no experience at all, we want good, quality people who are enthusiastic about learning and are looking for a fulfilling career.”
“The construction and maintenance workforces are aging and it’s important we recruit and train the next generation of craft professions,” said NCCER President and CEO Boyd Worsham. “It will take all of us working together to make a real impact on the industry as we strive to fill the skills gap.”
In a traditionally male-dominated field, SECA is making strides by reaching out to women who might be interested in HVAC technician training. According to the U.S. Bureau of Labor Statistics, women only make up 1.5 percent of HVAC professionals and 2.1 percent of plumbers in 2021; however, nine percent of students in SECA are women.
“I’ve always had trouble finding a job that I could grow in. Thankfully the apprenticeship program has allowed me to do just that and get my certification in HVAC,” said Kailey Scott, a current apprentice in SECA. “In this field there are no limits, and I’m more than excited to exceed beyond my limits thanks to this program.”
“When I started working in HVAC, it was a male-dominated field, and now it’s changing to be more diverse,” says Essing. “It’s positive to see this shift and we look forward to continuing to support anyone interested in the HVAC field.”
In addition to paying apprentices, SECA offers a comprehensive employment benefits package made to support each student and their families on day one of their training. According to Essing, SECA wants to attract recruits away from other jobs by offering them the rounded benefits of a career, including two weeks of paid time off, a 401(k) plan with company matching and health insurance programs. Students also get a $1,000 tool kit with hand tools, gauges, electric beaters and more that is theirs when they complete the program. SECA graduates can also take advantage of Service Experts locations spread across the country. Service Experts serves over 90 locations across America, and certified program graduates have the opportunity to work with any Service Experts location, from San Francisco to Miami.
The pay, opportunities and benefits aren’t the only way that SECA accommodates aspiring HVAC technicians.
“Going virtual has helped get everyone together, all at the same time,” says Ken Benedetto, a SECA technical trainer in New York. “Having virtual class in the morning has been a huge benefit, students are ready to learn before they start their day.”
After completing their SECA training and earning their NCCER credentials, program graduates can earn more than many fields that require a four-year college degree, without having to navigate their lives around repaying expensive school loans.
“If you are looking for a career that will support you for your entire lifetime and give you four years of schooling without debt, jumpstart your future with Service Experts Career Academy,” said Jim Hughes, SECA director.