How Rogerson Business Services Sold A California HVAC Business Successfully
Who They Are
Selling a successful, well-established business requires a strategy that protects its value while navigating the complexities of the M&A market. This was the case for the owner of a thriving HVAC company in Orange County, California.
After building his business for over a decade, he decided it was time to sell so he could retire and move his family abroad. The challenge was finding the right buyer and managing a sale process that was both confidential and thorough, ultimately resulting in a successful sale, despite multiple setbacks.
Rogerson Business Services (RBS), a middle-market advisory brokerage firm specializing in deals with annual gross sales between $3 and $50 million, was engaged to manage the entire process, from valuation to the final closing.
Deal Points
- Industry: HVAC
- Location: Orange County, California
- Established: 2011
- Sale Price: Confidential
- Terms: Seller Financing
- Reason for Sale: Owner retiring and moving internationally.
The Challenge: How Rogerson Business Services (RBS) Sold an HVAC Business After Three Deals Fell Through
The owner, whom we will call “John Miller” to protect his anonymity, faced several key challenges. He was unsure his California HVAC business could be sold, was deeply concerned about confidentiality, and needed a successful exit to fund his family's move abroad. He recalls, “I really wasn’t sure my business could be sold...”
Confidentiality was a major concern for John. "This was especially true with selling my business," he said. "I had great relationships with my customers and employees, and wanted to make sure all were protected."
The selling journey was a "rollercoaster," as John described it. The process took about 18 months from start to finish, longer than he had initially anticipated. What surprised him most was the sheer volume of buyer interest.
"Andrew said there were nearly 187 buyers, and he handled all of them to bring me the qualified buyers who were able to do a deal."
This deep buyer pool became the cornerstone of the deal's success when the path to closing became a test of endurance. The first promising deal fell through. Undeterred, Andrew leveraged the pipeline to secure a second offer, but that, too, unravelled. With two other qualified buyers still in contention, a final deal was struck with the fourth serious contender. A major hurdle had been the complexities and frustrations of working with lenders. To streamline the final deal, John made a strategic decision.
"For the 4th buyer, I decided to do seller financing and skip that hassle. Luckily, my business didn't have a landlord, so that was one less thing to worry about."
Throughout the lengthy process, John was able to focus on what he did best: running his business, which continued to grow and remain profitable.
"I think the most helpful part was working with Andrew Rogerson," he noted. "While I was busy with my business, Andrew took care of the valuation, marketing, all the buyer inquiries, lender questions, working with the attorney, and helping me and others."
The Right Buyer
After an 18-month journey with many twists and turns, the sale of the HVAC business successfully closed. The buyer, a strategic investment group we'll call "Pacific Growth Partners," was an excellent fit to continue the company's legacy.
The Right Offer
Our engagement with John began with a comprehensive business valuation. This foundational step established a credible and defensible asking price, giving John the confidence to move forward.
From day one, we implemented a strict confidentiality protocol. We created a "One Page Executive Summary"—a blind profile containing general information about the business without revealing its identity.
This was used to attract initial interest. Only after a prospective buyer was vetted and signed a Non-Disclosure Agreement (NDA) did we provide the detailed Confidential Business Memorandum. This process worked flawlessly.
As John confirmed, "None of my customers or employees knew the business was for sale until I was ready to let them know."
Our marketing strategy generated a phenomenal response, with nearly 187 inquiries. My role was to meticulously screen and manage this pipeline, shielding John from hundreds of unqualified inquiries and saving him countless hours. This ensured he only spent his valuable time engaging with serious, financially qualified buyers who could actually close the deal.
Persistence was the cornerstone of this engagement. When the first three potential deals fell apart for various reasons, our strategy of maintaining a robust pipeline of interested buyers allowed us to pivot without losing momentum.
We guided John through the pros and cons of each offer, helping him select the best path forward.
When lender financing became a recurring obstacle, we advised him on the structure and benefits of offering seller financing, a key move that ultimately got the deal closed.
THE SELLING PROCESS
THE NEGOTIATIONS PHASE
With the agreement in place, the next critical step is due diligence, where the buyer rigorously verifies the seller's claims. For a seamless process and timely closing, it's essential that both parties are well-organized, and this is where a business broker excels.
The buyer seeks a thorough understanding of the business, while the seller remains prudent about sharing sensitive information, often concerned about employee stability during the sale. Achieving this balance is vital.
In this case, both parties were exceptionally well-prepared. The seller's financial records were meticulously updated to reflect true profits and growth potential. The buyer was clear about their expectations and decisive about deal-breakers. This high level of organization led to an efficient due diligence process, with minimal issues arising.
Both parties were poised to sign the purchase agreements confidently.both parties must be
PURCHASE AGREEMENTS
In this situation, it was necessary to create a single purchase agreement.
The agreement was structured as seller financing. While the type of sale can vary for tax purposes and to accommodate the needs of either party, in this case, seller financing meets the requirements of both parties.
FINANCE AND SELLER FINANCING
As we said during the introduction of this article, buying or selling a business is never easy.
This is especially true when seller financing is involved.
The main reason is that a business transaction typically has a flow or rhythm. The Seller Financing process often interrupts this flow, as the transaction must come to a stop while a specific item is addressed before the next steps can be taken.
Seller financing is a powerful deal structure in which the seller provides a loan to the buyer, enabling a smooth purchase of the business. This arrangement allows the buyer to make payments directly to the seller instead of relying solely on traditional bank financing.
Pros of Seller Financing:
1. Easier Access to Financing: Seller financing opens doors for buyers who may struggle to obtain traditional loans, such as first-time entrepreneurs.
2. Attracting More Buyers: By offering financing options, sellers significantly expand their potential buyer pool, making their business more appealing.
3. Flexible Terms: Both parties can negotiate customized payment structures, interest rates, and repayment schedules that fit their unique situations.
4. Faster Transactions: Seller financing streamlines the process, allowing for quicker closings without the delays often associated with bank approvals.
5. Potentially Higher Sale Price: Sellers can command a higher sale price by providing attractive financing options that enhance buyer interest.
Cons of Seller Financing:
1. Risk of Default: Although there are risks, savvy sellers can mitigate the potential for buyer default through careful vetting and strong agreements.
2. Cash Flow Considerations: While sellers may not receive the full payment upfront, they can still structure deals that align with their financial goals.
3. Increased Responsibility: Serving as a lender means sellers take on additional responsibilities, but this role can lead to rewarding long-term relationships with buyers.
4. Complex Negotiations: While negotiations can be intricate, engaging in open discussions ensures that both parties feel confident and aligned.
5. Valuation Impact: Sellers should be prepared for buyer scrutiny regarding financing terms, but they can leverage this as an opportunity to showcase the business's value.
Takeaway: Seller financing is not just a viable option; it's a strategic tool that can enhance transaction speed and value while providing benefits to both sellers and buyers.
With the right approach, both parties can enjoy a smooth and successful business transfer.
ESCROW
Once the due diligence, legal, accounting, tax, SBA loan documents, and asset titles were underway, all components of the transaction confidently moved to the escrow company. The escrow process guarantees that all assets are transferred from sellers to buyers clearly and securely.
Two critical factors led to the success of this transaction: strong communication and a shared commitment to achieving a positive outcome.
As the business broker, we ensured constant and proactive communication among all parties, keeping everyone informed about the process and any immediate concerns.
Closing the transaction required addressing every detail, safeguarding the buyer's investment, and ensuring they were fully prepared to operate independently post-sale. Ultimately, both parties collaborated effectively, paving the way for a successful transaction.
After an 18-month journey with many twists and turns, the sale of the landscaping business successfully closed. The buyer, a strategic investment group we'll call "Pacific Growth Partners," was an excellent fit to continue the company's legacy.
John was able to achieve his ultimate goal. "I am relieved to have the sale closed, as part of my decision to sell the business was to move our family out of the country... which was done during the sale."
Looking back, John reflected on the experience. "It was more complicated and detailed than I expected. There are no shortcuts. I felt very confident with Andrew and how he answered my questions. He talks plainly and honestly, which is like me, and so I liked that." Now happily retired in Italy, John’s story is a powerful example of how the right professional guidance can turn the complex and often turbulent process of selling a business into a life-changing success.
HAPPY SELLER
Once the escrow closed, the seller of the HVAC business was super excited! They put in a lot of effort during the transition to make sure the buyer was ready to hit the ground running. Here’s what they had to say about it in their own words:
" I think the most helpful part was working with Andrew. I am very detailed with how I run my business, and Andrew has a similar approach. While I was busy with my business, which was growing as I was trying to sell it, Andrew took care of the valuation, marketing, all the buyer inquiries, lender questions, working with the attorney, helping me and others.
I really wasn't sure my business could be sold. My wife encouraged me to talk to brokers, which is how I met Andrew. Andrew explained the risks and his process, and so I ordered a business valuation. Once I studied the business valuation, I decided to work with Andrew, and the rest, as they say, is history..
”
HAPPY BUYER
The buyer of the business was equally delighted once the escrow was officially completed. He was meticulous about every detail and fully prepared to assume control of the operation. Although the lengthy duration required to resolve all issues posed some challenges, the buyer consistently put in the effort needed to ensure his success. The positive outcome is that his hard work is indeed yielding results. Here is his feedback in his own words:
"Buying a business can be quite the challenge, right? But you know what? Having the right team by your side and really connecting with the seller can totally change the game. In fact, this deal went smoothly mainly because we figured out a way to make it easy with seller financing.”
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