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---
title: HVAC Buyer: Engineer's $2.1M Deal | Case Study
description: A mechanical engineer acquired a $2.1M HVAC company with 2,100 service agreements. Retention bonuses and an earnout resolved owner-dependency risk.
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---

# HVAC Buyer: Engineer's $2.1M Deal | Case Study
> A mechanical engineer acquired a $2.1M HVAC company with 2,100 service agreements. Retention bonuses and an earnout resolved owner-dependency risk.

---

Video Guide

Watch: HVAC Buyer — Engineer's $2.1M Acquisition

7 min

* * *

## "I'm Good at Fixing Things. I'm Not Good at Running a Business."

Kevin had been an HVAC technician since he was 22. He'd spent the first eight years of his career working for a regional company that handled mostly residential service calls — leaky condensers, failing compressors, clogged condensate drains. He was good at it. He could diagnose almost any problem within minutes. He was fast, efficient, and good with customers.

At 30, he moved to a commercial HVAC company that focused on larger systems — office buildings, retail centers, light industrial facilities. The work was more complex, the equipment was more sophisticated, and the pay was better. He spent the next 16 years building a reputation as one of the best commercial HVAC techs in the Austin area.

He was also quietly frustrated. He was making $95,000 a year, which was good money for a technician. But he knew the company was billing his time out at $175 an hour. He knew the owners were making a lot more money than he was. He also knew he didn't want to start his own business from scratch. He was good at fixing things. He wasn't good at running a business.

Then one of his colleagues told him about a small HVAC company in Round Rock that was for sale. The owner was retiring. The company had been around for 20 years. It had a good reputation. It had a solid base of recurring commercial service contracts.

Kevin called a business broker.

"I've got about $180,000 saved up," he told the broker. "I don't know if that's enough to buy anything."

The broker laughed. "That's plenty," he said. "You're not buying it with cash. You're buying it with an SBA loan."

* * *

## How Recurring Revenue Changes the Math

Gary had started his HVAC company in 2004, working out of his garage with a single truck. He focused on commercial clients from the beginning. He knew that residential HVAC was a race to the bottom on price. Commercial clients cared more about reliability and responsiveness.

Over 20 years, he built a solid business. He had 11 employees, including three NATE-certified technicians. He had a fleet of eight service vehicles. He had about 80 commercial clients under annual service agreements — representing roughly 40% of his total revenue.

| Business Metric | Gary's Business | Why It Mattered to Kevin |
| --- | --- | --- |
| Annual Revenue | $2,100,000 | Large enough to sustain professional management |
| Owner's SDE | $490,000 | Supported 2.4x debt service coverage — well above SBA minimum |
| Recurring contract revenue | 40% of total | Predictable; less weather-dependent than residential |
| Years in business | 20 years | Strong operating history; lenders prefer 3+ years |
| Technician tenure | Average 7.1 years | Experienced, reliable team; reduced immediate hiring risk |
| NATE-certified techs | Three | Critical for commercial work; difficult and expensive to recruit |
| Customer concentration | Largest client = 9% | No single client above SBA's informal 20–25% flag threshold |
| Service area | Williamson County | Tight geography; efficient routing |

The asking price was $2,100,000. Kevin's broker told him it was priced at 4.3x SDE — toward the upper end of the range for HVAC companies with meaningful recurring revenue. Valuation research (April 2025) reports SDE multiples of 2.40x–3.40x; industry guides (2025) note 3.25x–4.0x for companies in the $1M–$5M revenue range. The recurring revenue premium was real and documented.

Kevin spent three weeks doing his due diligence. He reviewed Gary's financials. He talked to Gary's customers. He rode along with the technicians on service calls. He liked what he saw.

* * *

## The Value of a Good Technician

Kevin knew that Gary's three technicians were critical to the business. They were all NATE-certified — meaning they had passed a rigorous industry certification exam. They were all experienced. And they were all in high demand.

He also knew that Gary hadn't given them a raise in three years.

Kevin's broker flagged this immediately. "You need to lock these guys down," he said. "If they leave, the business is worth a lot less."

Kevin agreed. He met with each of the technicians individually. He told them he was planning to buy the company. He told them he valued their experience and expertise. And he told them he was going to give them a raise.

He offered each of them a $5,000 retention bonus, payable after six months, and a $7,500 annual raise, effective immediately upon closing. All three accepted.

| Employee | Role | Annual Salary | Retention Bonus |
| --- | --- | --- | --- |
| Carlos | Lead Technician | $78,000 | $5,000 |
| Tony | Technician | $69,000 | $5,000 |
| Maria | Technician | $64,000 | $5,000 |

Industry research (November 2025) quantifies the effect: HVAC companies with 40% or more revenue from service agreements consistently command 0.5x to 1.0x higher SDE multiples compared to companies that rely primarily on one-time work. For a business with $490,000 in SDE, that premium equals $245,000 to $490,000 in additional enterprise value. The asking price reflected it — and Kevin believed it was justified.

* * *

## The Deal

| Component | Amount | Notes |
| --- | --- | --- |
| Purchase Price | $2,100,000 | Agreed price |
| Total Equity Injection | $210,000 | 10% of purchase price |
| SBA 7(a) Loan | $1,890,000 | 10-year term |
| Interest Rate at Close | Prime + 2.75% (10.25%) | Variable; tied to Wall Street Journal Prime Rate |
| Monthly Debt Service | ~$25,100 | Annual: ~$301,200 |
| DSCR at Close | 1.63x | Based on $490,000 SDE; SBA minimum 1.15x–1.25x |
| SBA Guarantee Fee | ~$37,800 | Financed into the loan |
| Working Capital Reserve | $40,000 | Retained from savings for 60-day operating buffer |
| Time from LOI to Close | 84 days | Within national SBA median range |

* * *

## Year One

Kevin took over in early January. Gary stayed on for 30 days to help with the transition. Kevin spent most of his time getting to know the customers and the technicians. He quickly realized that Gary had been running the business on a shoestring. The trucks were old. The equipment was outdated. The marketing was non-existent.

He started making changes. He bought three new service vehicles. He invested in new diagnostic equipment. He hired a marketing company to build a new website and run online ads.

He also focused on building relationships with the technicians. He made sure they had the tools and equipment they needed. He listened to their ideas. He empowered them to make decisions.

Within six months, the company was growing. Revenue was up 15%. Profits were up 20%. And the technicians were happier than they had ever been.

By the end of Year One, revenue came in at $2,415,000. His SDE was $580,000. After debt service of $301,200, his cash flow was $278,800 — compared to the $95,000 salary he had been earning as a technician.

He wasn't just making more money. He owned something.

* * *

## What Kevin Would Tell the Next Buyer

He's been asked about the process by several colleagues since closing — all of them, like him, experienced technicians in their 40s sitting on savings and wondering if business ownership is possible.

He tells them three things:

**First: recurring revenue is worth the premium.** Don't be afraid to pay a higher multiple for a business with a solid base of recurring revenue. It's the most predictable, reliable source of cash flow — and it makes the business much easier to manage.

**Second: take care of your technicians.** Your technicians are the face of your business. They're the ones who interact with your customers every day. If they're happy, your customers will be happy. And if your customers are happy, your business will be successful.

**Third: don't be afraid to invest in the business.** Gary had been running the business on a shoestring for years. Kevin knew that he needed to invest in new equipment, new technology, and new marketing to take the business to the next level. It was worth the investment.

* * *

## Data Sources

All financial benchmarks and industry statistics cited in this case study are derived from publicly available industry reports, transaction databases, government agency data, and industry association research current as of the publication date. No proprietary or confidential transaction data was used. Specific sources include federal agency publications (such as SBA), industry association reports, valuation research, and publicly accessible transaction benchmark databases. Market conditions change frequently; readers should verify current data before making decisions.

* * *

> 
> 
> **COMPOSITE CASE STUDY NOTICE:** This case study is a composite illustration for educational purposes only. Kevin, Gary, Carlos, Tony, Maria, and all other individuals are fictional. All financial figures are illustrative composites based on benchmarks — not any actual transaction or real person. This does not constitute financial, legal, or tax advice. Consult qualified professionals before making any acquisition decision. Travis Business Advisors does not guarantee any specific outcome, sale price, or timeline.
> 

* * *

*Published by Travis Business Advisors, Austin, Texas • travisbusinessadvisors.com*
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