“As long as we were hitting our numbers, they left us alone,” says contractor on private equity

Welcome to the third edition of Post Close. While the exact number varies by source, over 50 private-equity-backed platforms are actively acquiring HVAC contractors across the country, drawing a fair amount of praise — and criticism. 

Post Close is a monthly effort to shed light on what’s actually happening and highlight — anonymously — the thoughts of contractors who have sold their businesses to a platform. 

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What was an immediate observation you made after closing?  

They said, “You’re growing 20% year-over-year; you’re the highest in our whole group — just keep doing it your way.” They didn’t come in and change anything and mess with the brand. They knew what the brand meant and the value we created. As long as we were hitting our numbers, they left us alone.

The impact on culture gets talked about a lot. How’d that go?

I was very careful with who I partnered with. I told them, “I know you’re in it for the money, and that’s what this is all about. I want money, too, and you’re only investing with me because you want a return on your investment, and I get that. But as long as I can meet the budget and the return, leave me alone.”

In my company, the compensation and benefits were more than employees could get anywhere else. They knew they had it good. So it worked out for me. I put a new GM and other managers in place from within the company; I didn’t bring in anybody from the outside. And we kept the continuity, things continued to flow, and the trust and culture continued to build on itself. 

Were there any rough patches during the transition? 

During Covid, they said that [portfolio] companies with over 50 employees would have to mandate vaccinations. We were on a call when they told us, and no one said a word. So I raised my hand and said, “I understand this is something you’re looking at implementing, but just to let you know upfront, I will not. I won’t be responsible for somebody else’s livelihood. It’s each individual’s decision. They choose their direction and what’s best for their family and health. So if you make it mandatory, you’ll have to fire me, and that’s okay with me.” 

I bought health insurance very competitively and always kept the price down by how I managed the plans. But with the big group plan, they got rid of all the ways that I could really manage the cost. They just rolled out the standard plan, which is ridiculously expensive, so my health insurance tripled. 

What about missed opportunities? 

[They didn’t have] a good strategy to keep the team intact. It was up to me as a leader. I even asked them, “Hey, can you help me spin this deal to keep some key people in place?” I think it would be to their benefit to work with owners and leave some money aside to keep key people — “key employee insurance” is all it is. So that was missed out on. 

I’ve seen companies fall apart because they didn’t have it. Key employees had no reason to stay — nothing to handcuff them there, so they just did their own thing and it didn’t work out. 

When you talk to other owners considering selling, what do you mention? 

Don’t do it on your own. I guarantee I got double what I could for my business by going with a broker because they know the people out there. I [also] don’t like contingency clauses. Like, “Okay, we’re gonna give you 10x, but only if you do this in year one.” Don’t do a contingency. It’s just all or nothing. That’s what somebody who’s really interested in you and believes in what you have to offer will put on the table for you.

Editor’s note: Responses have been lightly edited for clarity.

See our first and second editions