OPERATING HVAC WITH A 3+ HOUR DRIVE TO WORK?
Searchfunder brain trust! Has anyone made their first acquisition in a company that's a lengthy drive from where they live?
In my quest to buy an HVAC or plumbing company in South Florida, I stumbled across one small ($300k-$500k cash flow) air conditioning company that's a 3 hour drive from where I live. Current owners live out of state. This would be my first acquisition in the industry.
Typically, I'd ignore anything far away. However, this business is within driving distance, so it's not like I need to take a 2+ hour flight to visit the business. And it's already run remotely. The way I could see this working is I'd go for at least two days each week and run it remotely the rest of the week. But, while I'm OK with trading off some growth & efficiency by being relatively far away, I want to make sure I'm not risking the whole company imploding!
Would love to hear thoughts and personal experiences!
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With Best Wishes, ^[redacted]
My 2 cents
Vijay
I'd still only buy the business if I estimated I could run it semi-remotely from day 1, but post-acquisition, I'd actually start in-person. Builds in a margin of safety.
The remote companies I have worked in, had to local component. Flights and financial services don't really have anything local about them. Just airports.
I'd love to connect regarding the HVAC industry!
Side-note: there's also the additional complexity of attributing revenue and costs to the subsidiary vs. the parent. For all I know, the parent is putting internet ads on its own balance sheet but attributing the revenue from those ads to the subsidiary. But this has nothing to do with distance, just divestures.
Happy to talk about HVAC by the way! Send me an email at [redacted] and we can set up a time to talk (same goes for anyone else interested in home services).
Another thing to consider in the negotiation is how transparent you want to be with the Seller on this point. Sometimes a Seller will view your long distance commute as a risk to the business that they built. It might be a stumbling block getting to close, especially if they will be rolling any equity.
The seller has experience with this company that you don’t have. He has earned the loyalty of his team. He can work remotely and it may not be a big deal. As a buyer, you don’t have that luxury. For your first one, you need to be in there... everyday, grinding it out. Every company is different (especially small ones as they tend to be a direct reflection of the previous owner) and it’s hard to get a grasp on them when you’re not physically there.
You will need a good system and structure in place and find one person to manage the operation who reports to you. Having too many directv reports in a small organization will just cause lots of problems.
Happy to talk off line as I was interested in a national service business once but couldn't get all the pieces aligned.