Description

This HVAC firm has been in the bay area and had name recognition for over 27 years. The firm has been managed with solid business practices and records maintained in accordance with GAAP.

There are two segments of operations for the corporation. There is a construction department which bids, designs and constructs new construction and retrofit market. This segment of work has purposefully downsized due to retirement. They put their focus into the service department. The service department has 222 planned maintenance agreements in place for 30 day, 60 day, 90 day, 120 day and 180 day maintenance agreements. These planned maintenances are on a schedule and mostly assigned to specific technicians based on the building type. Generated by these inspections are numerous repairs and also unit change outs. These are fast paced repairs and replacements. Cash receipts is between 10 to 30 days on this type of work. Responsiveness to the client is paramount. The profit margin on the planned maintenance is priced competitively at 20%. The profit margin on the repairs and quoted change outs is between 30 -50% depending on the size and type of the project. Overall profitability on the service segment is between 30 -33%.

The construction segment is not marketable since the projects are bid and completed and mostly not negotiated clients. The few negotiated clients in construction also have service accounts so they would be maintained through the service segment. Payroll posts to job costing and the general ledger. Accounts Payable posts to job costing and general ledger. The job cost reports are used in conjunctive with the financial statements for management of the firm.

Posted Aug 18, 2016

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