THOUGHTS ON HVAC + DIGITAL COMMERCE

Since I work at the intersection of manufacturing and e-commerce I’m often asked about acquisition opportunities.

The unprecedented heatwave (we reached 116F in Portland) created such a demand for HVAC (heating, ventilation, and air conditioning) systems that most local companies returned calls only for existing customers.

Similar to other industries distributors in HVAC are fragmented with numerous small family owned businesses. A trend we see over and over again is when the owners reach retirement age their heirs have little interest in commanding the family business.

Home air conditioning in the U.S. is expected to increase 59% over the next 30 years and demand from commercial buildings is expected to increase 17%, according to a 2020 report from research group Climate Central.

Consolidation through tuck-in acquisitions is happening and there will be a strong push to create cost saving, growth focused digital sales strategies to double down on the growth.

Speaking of digital, Watsco, Inc. is the largest distributor of HVAC systems in North America. On a recent earnings call their VP of Strategy said that over 1/3 of their transactions are now e-commerce driven with a significant percentage of those taking place after hours.

Lennox International is a leading HVAC manufacturer who has also made substantial investments in digital. Their CEO Todd Bluedorn is passionate about having a superior digital experience and is a delight to listen to on earnings calls. His passion is contagious.

So I say to my friends in mergers and acquisitions look closely at combining HVAC with a smart e-commerce strategy. There's a big opportunity here.

Special thanks to Lori Lombardo & Association for Corporate Growth.



share: