If searchers & banks don't like new construction, why do they like HVAC?

by a searcher from University of British Columbia - Sauder School of Business

2 years ago

I totally get why a searcher/bank would view a GC contractor as risky because of the project-based work (lumpy revenue where the owner is typically aggressively out hounding down hew work).

But when you look at the most profitable business for an HVAC company, it is the installation work, not the service/maintenance work (in fact, from my understanding, the service/maintenance work is a loss leader).

Installation work is primarily tied to new construction, so why are HVAC companies so attractive?

Is it because one HVAC company services many new construction projects and thus has low project/customer concentration, whereas a GC has high project/customer concentration. I suspect this is the case, but just wanted to hear others' thoughts.

1 like
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14 comments

searcher from University of Pennsylvania - The Wharton School

HVAC also benefits from every PE shop trying to roll them up, for a lot of the reasons noted above.

2 months ago | like reply | 0 likes

searcher

You can have few models running at the same time where you can have reoccurring revenue and new sales as long as you have the capacity to get the work done

5 months ago | like reply | 0 likes

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