Why HVAC Companies Are a Top Acquisition Target
If you want to buy an HVAC business, you’re looking at one of the strongest acquisition opportunities in the trades sector. The HVAC industry combines essential service demand with high-margin recurring revenue — a combination that makes both operators and lenders very happy.
The U.S. HVAC market continues to grow, driven by aging housing stock, increasing energy efficiency regulations, and the ongoing shift to heat pump technology. For acquisition-minded entrepreneurs, this means strong tailwinds for years to come.
Here’s why HVAC companies are so attractive to buyers:
- Recurring maintenance revenue: Annual service contracts create predictable, high-margin income streams
- Dual revenue model: Installation projects provide large one-time revenue while service and maintenance generate steady cash flow
- Regulatory tailwinds: Refrigerant transitions (R-22 to R-410A to R-454B) and efficiency mandates drive replacement cycles
- Aging owner demographics: Many HVAC company owners are baby boomers ready to sell
- Fragmented market: Thousands of small, independent operators create abundant acquisition targets
HVAC companies typically trade at 3x to 4x seller’s discretionary earnings (SDE), with deal sizes ranging from $500,000 to $10 million. Companies with a large maintenance contract base and balanced residential/commercial mix command premium valuations.
How SBA Loans Work for HVAC Acquisitions
The SBA 7(a) loan is the go-to financing tool for buying an HVAC company. Here’s the standard structure:
- Loan amount: Up to $5 million
- Down payment: 10-20% of total project cost
- Term: 10 years for business acquisition (25 years if real estate is included)
- Interest rate: Prime + 1.75% to 2.75%
- Collateral: Business assets, personal guarantee, real estate if available
For larger HVAC acquisitions that include owned real estate (warehouses, office/shop buildings), the SBA 504 loan can be combined with a 7(a) to optimize the overall financing structure.
Why SBA Lenders Like HVAC Companies
HVAC businesses check the boxes lenders care about most:
Maintenance contracts = predictable debt service coverage. A company with 1,000+ active maintenance contracts has a revenue floor that’s largely independent of new sales. Lenders underwrite this recurring revenue with high confidence.
Essential service with year-round demand. While HVAC has seasonal peaks (summer cooling, winter heating), the business generates revenue 12 months a year through maintenance, repairs, and installations. Lenders prefer this to purely seasonal businesses.
Strong asset base. Service vehicles, inventory (HVAC units, parts), specialized tools, and diagnostic equipment provide tangible collateral.
Skilled labor creates competitive moats. EPA 608 certifications, state licensing requirements, and manufacturer-specific training create real barriers to entry that protect the business.
Lender Requirements Specific to HVAC Deals
Here’s what SBA lenders specifically look for in HVAC acquisitions:
- Industry experience: Lenders strongly prefer buyers with HVAC or related trades experience. If you don’t have it, you’ll need a strong management team that does — and employment contracts to prove they’re staying
- Seasonal cash flow management: Lenders will scrutinize your projections to ensure you can service debt during slow months (typically spring and fall)
- Maintenance contract retention: What’s your plan to keep contracts active post-acquisition? Lenders want specifics
- EPA compliance: All technicians must hold proper EPA 608 certifications for refrigerant handling — lenders verify this
- Manufacturer relationships: Authorized dealer agreements with major brands (Carrier, Trane, Lennox, etc.) add value and lender confidence
- Inventory management: Excess or obsolete inventory will be discounted by lenders — clean inventory helps
Addressing Seasonal Revenue in Your SBA Loan Application
The biggest concern lenders have with HVAC companies is seasonal revenue fluctuation. Here’s how to address it:
Build a 12-Month Cash Flow Projection
Don’t present annual numbers and hope for the best. Show lenders month-by-month projections that demonstrate:
- Revenue peaks and valleys based on historical patterns
- How maintenance contract revenue provides a baseline during slow months
- Working capital reserves to bridge seasonal gaps
- Debt service coverage in every month, not just the annual average
Highlight Revenue Diversification Strategies
Smart HVAC operators reduce seasonality through:
- Indoor air quality (IAQ) services: Duct cleaning, air purification, and filtration — sellable year-round
- Commercial contracts: Commercial HVAC work often has more consistent scheduling
- Plumbing or electrical add-ons: Some HVAC companies diversify into adjacent trades
- Energy audits and retrofits: Growing demand driven by utility rebate programs
Due Diligence Checklist for Buying an HVAC Business
Maintenance Contract Analysis
This is the single most important part of HVAC due diligence:
- Total active contracts: How many? What’s the annual revenue?
- Contract renewal rate: Industry average is 75-85%. Below 70% is a concern
- Contract terms: Are they annual, multi-year, or month-to-month?
- Pricing analysis: Are contracts priced profitably, or used as loss leaders for upselling?
- Customer mix: Residential vs. commercial contract breakdown
Workforce Evaluation
- EPA 608 certifications: Universal, Type I, Type II, or Type III — verify every technician
- State/local licenses: Who holds the company’s HVAC contractor license?
- NATE certifications: North American Technician Excellence certifications indicate quality
- Manufacturer training: Factory-authorized service capabilities for specific brands
- Technician tenure and compensation: Are they at market rate? Flight risk?
Equipment and Fleet
- Service vehicle inventory: Age, mileage, condition, and specialized equipment (recovery machines, vacuum pumps, manifold gauges)
- Parts inventory: Value, age, and relevance — HVAC parts can become obsolete with refrigerant transitions
- Diagnostic and installation tools: Combustion analyzers, refrigerant scales, recovery units, brazing equipment
- Software systems: Dispatch, CRM, and accounting platforms — are they modern and transferable?
Financial Review
- Three years of tax returns and financial statements
- Gross margin by service type: Installation vs. service vs. maintenance — each has different margins
- Warranty reserves: Outstanding manufacturer and labor warranties
- Accounts receivable aging: Especially for commercial accounts
- Add-back analysis: Owner benefits, one-time expenses, and discretionary spending
Common Pitfalls When Buying an HVAC Company
1. Overvaluing installation revenue. A company doing $3M in revenue but 70% from installations has a very different risk profile than one doing $2M with 60% from service and maintenance. Installation revenue is project-based and less predictable. Lenders and smart buyers value recurring revenue more highly.
2. Ignoring the refrigerant transition. The industry is transitioning from R-410A to R-454B (a mildly flammable A2L refrigerant). Companies that haven’t invested in training and equipment for the new refrigerants face real costs ahead. Factor this into your valuation.
3. Underestimating technician flight risk. HVAC technicians are in extremely high demand. If the seller’s key techs leave because they don’t like the new owner, your revenue drops immediately. Retention plans aren’t optional — they’re essential.
4. Missing seasonal working capital needs. Your slowest months still have payroll, rent, vehicle payments, and loan payments. Underfunding working capital in an HVAC acquisition is a recipe for a cash crunch in April.
5. Not verifying manufacturer dealer agreements. Authorized dealer status with major manufacturers can represent significant revenue. Make sure those agreements transfer with the sale — some require approval from the manufacturer.
Sample HVAC Acquisition Deal Structure
Example: $2 million HVAC company acquisition
- Purchase price: $2,000,000
- Working capital: $150,000
- Total project cost: $2,150,000
- Buyer equity injection (10%): $215,000
- SBA 7(a) loan: $1,935,000
- Term: 10 years
- Estimated monthly payment: ~$22,200
With SDE of $600,000 and a purchase multiple of 3.3x, this deal provides strong debt service coverage — even accounting for seasonal revenue fluctuations.
How GoSBA Helps You Buy an HVAC Business
At GoSBA Loans, we’ve financed numerous HVAC acquisitions and understand exactly what it takes to get these deals approved:
- 50+ lender network: We match your HVAC acquisition with lenders who actively seek trades businesses — not generalist banks that don’t understand the industry
- $320M+ funded in 2025: We close SBA acquisition deals every week across all industries
- 100% free service: Lenders pay us, not you. Our advisory and loan packaging services cost you zero
- Free business plans and financial projections: We build SBA-compliant business plans and month-by-month financial projections — a $2,500-$5,000 value — completely free
- Seasonal cash flow expertise: We know how to present HVAC financials to lenders in a way that addresses seasonal concerns head-on
We don’t just submit your application and hope. We structure your deal, prepare your loan package, address lender concerns proactively, and guide you through closing.
Ready to Buy an HVAC Company?
Whether you’ve identified a specific HVAC company to acquire or you’re still exploring the market, the right time to talk to us is now — before you make an offer, not after.
We’ll help you understand your purchasing power, structure the deal for maximum lender appeal, and navigate the SBA process from application to funding.
Contact GoSBA Loans today for a free consultation. Let’s get your HVAC acquisition funded.
