Built To Sell: How Your Trade Industry Company Can Have Buyers Drooling

Mike PersingerAugust 27th, 2020

Kevin Comerford, president of Service Champions North, has been where a lot of owners in the skilled trades want to be. 

His HVAC business has more than 250 employees in Northern California, and thousands of five-star reviews. And a few weeks ago, he became the flagship location on the West Coast for the Wrench Group after going through the sales process and being acquired. 

Comerford joined a ServiceTitan webinar recently to talk about the process. He was joined by ServiceTitan’s Chris Hunter, whose Hunter Super Techs was recently acquired by Turnpoint Services, and Kyle Berkman and Jeremiah Mann of Intrepid Investment Bankers, based in Los Angeles. 

Hunter started out as a technician in Ardmore, Okla., before building Super Techs with a specific purpose, instilled by mentors: Start with the end in mind. 

“I was thinking, ‘Why in the world would I want to start with the end in mind?’” he says. “And they said, “Well, here's the thing. You're going to exit your business. One way or other you're going to exit it. You might as well prepare for that now.”

“I was thinking, ‘Why in the world would I want to start with the end in mind?’ And they said, “Well, here's the thing. You're going to exit your business. One way or other you're going to exit it. You might as well prepare for that now.”

Chris Hunter, Director of Customer Relations

Comerford agrees with that philosophy. 

“I'm a believer that no matter what all great things are going to come to an end,” Comerford says. “No matter what, all great things. And so when I read the book, The E Myth, early on in my career, one of the quotes in there that Michael Gerber goes through is the only reason you should be in business is to sell your business.

“And so that over the years has just stayed in my mind. The only reason I should be in business is to sell my business. You don't really understand that at first.”

Comerford has grown his business. From his start in 2003 as a technician starting his own company to today, when he expects to finish with more than $50 million in revenue with between 235 and 250 employees, that has been evident.

And, he says, the company has maintained 15 to 20 percent growth annually for the past three years as an HVAC-only company. 

That only begins to explain why investors were drooling over Service Champions North. 

But first, here are the 12 steps to preparing your home services company for sale:

1. Build a sales and marketing company instead of a trade company.  

Comerford says his company grew from one truck in 2003 to $15 million in revenue in four years. “We were a sales and marketing machine,” he says. “Never be ashamed. These businesses are sales and marketing machines, and that's the driver. And we just happened to be in the heating and air conditioning business. I never put the trade in front of the sales and marketing piece.” 

2. Decide when the timing is right. 

This is largely dependent on your personal plans, but give yourself a sufficient runway. Leave time for your business to be prepared for market to ensure a successful process. “For a lot of entrepreneurs, the right time to sell is a very personal decision,” Mann, managing director of Intrepid, says. “And it's based on what your goals are in life, what's going on outside of the business.”

3. Build a plan and a timeframe for your goal.

Comerford says he had a three-year plan. “And by creating that plan, and just in my mind, knowing where I wanted to be at $65 million in three years,” he says, “the universe just kind of put all these things together.” 

Sometimes, it goes more quickly than expected. 

“About 12 months into my three-year plan, that's when I got connected with Jeremiah and Kyle, and then it really accelerated for that six months,” he says. “And by 18 months into my plan, I had sold my business.”

4. Don’t be distracted by the process. 

Comerford said some of the best advice he got was to keep running, and growing, his business and let the investment bankers handle the details. 

“The best thing you can do is run your business,” he says. “You can't get distracted because you're going to be valued all the way up until the point where you sell this thing. They're watching all along and your value can change if they see you dip.”

5. Hire an investment banker. 

Comerford says he was “a little bit unsure at first” about this step, because of the cost. That, he says, was wrong. “Bottom line, it is worth every single penny for two reasons,” he says. “No. 1, it allows you to stay focused on your business. No. 2, these guys are pros. They know what they're doing with regards to getting you the most value for your business. … 

“They're the value builders for our clients to be able to pay a higher value for my business, for our product. They cost a lot of money. But by the same token, it is worth it, over and over again.”

6. Keep the process confidential to all except a small number of people. 

Comerford involved his controller, chief operating officer, marketing person and, later, the head of human resources in the process. He encourages owners to keep the group small.

“The last thing you want is for it to get out in the marketplace, as you can imagine, or even get inside your own company, which is worse, that you're looking at doing this,” he says. 

7. Bring in an investment banker.

Kyle Berkman, vice president of Intrepid Investment Bankers, helped Comerford through the sales process, providing a different kind of expertise—contacts with private equity, experience structuring deals, and skill in the value documentation potential buyers need. 

“It's one thing to build a great business for decades or with lots of desirable characteristics and value attributes,” Berkman says. “We have tremendous respect for entrepreneurs that have climbed that entrepreneurial mountain like Chris and Kevin, and to really make things happen.

“Conveying those value attributes to investors is a different skill set than building a company. Telling that story is all we do, day-in and day-out. We're translators who speak the same language as investors, but we also speak the same language as business owners and superstar CEOs like Kevin.”

That story, told effectively, can produce a better valuation for the company. 

“We're kind of offensive lineman protecting our quarterback CEOs,” Berkman says. “We run interference with the investors and counterparties to allow Kevin to focus on running the business.”

They also protect companies from below-market valuations. 

“In a vacuum left to their own devices, a lot of investors might be tempted to try to get away with below-market terms, and they know when we're involved they just can't get away with that.”

8. Leave some meat on the bone.

What you don’t want, Mann says, is to sell as things are leveling off in your business. The valuation a buyer pays is a multiple of your EBITDA, based on historical growth and expected future growth. 

“A buyer is going to pay a higher multiple if we can tell a really compelling growth story than if everybody is kind of gassed after this long run and you start flattened out,” Mann says. “When to sell is personal, but it's also looking at the track record of the business and making sure you've got a good year or two of additional high growth years ahead of you.”

9. Get your management team in order.

When buyers purchase a company, what they're really buying is the team. If that team is largely the owner, buyers won’t be as excited. 

“If you have a team that has a good operations person, a good salesperson, a good marketing person, really all the key players, as the company grows you can be focused on strategy rather than having to worry about every little detail of the day-to-day operations,” Mann says. 

That will also clarify who should step into the owner’s shoes, if the owner won’t be involved as Comerford is, once the company changes hands. 

Those key players, especially the ones involved in the sales process, should be paid well, Mann says. “It's important that they feel like they're being compensated beyond just their salary and their bonus for the work that you put into it,” he says. 

10. Hire the help you need, even if it’s temporary.

Mann suggests hiring a temporary CFO or controller if a strong one isn’t already in place, and get legal counsel experienced in these sales. An estate planning attorney could also be helpful. 

“Typically, our clients before going through a process have been working with a general counsel,” Mann says. “Maybe it's a small firm or a one-man shop who's probably done a great job for general contract and lease review but doesn't have the sophistication to run a process.”

11. Get your processes, data and financials in order.

Buyers will ask lots of questions and dig deep into financials. It’s important to separate out personal expenses going to the business, for example, because that’s common in privately held businesses. For some companies, audited or reviewed financials lend credibility and aid the buyer in their analysis. 

A robust business software package such as ServiceTitan can help here, Mann says. The cloud-based system makes scalable, repeatable processes and robust data reporting easier.

“Are you tracking the right KPIs? Do you have dashboard and reporting packages going out to the key managers in your organization so they can manage effectively?” Mann asks. “Quite frankly, in this industry, it's things like, are you on ServiceTitan? 

“Because Kevin was on ServiceTitan when we were working with the Wrench Group (which also uses ServiceTitan), rather than having the Wrench Group give Kevin a list of 50 different reports they want, Kevin was able to actually download his ServiceTitan database onto their platform and let them slice and dice everything exactly the way they wanted it.

“I will tell you, I've never had a situation where the entire operational KPI side of the diligence list is basically one question and I think because Kevin and Wrench were on the same system, they were able to do that. 

“In this industry, I would certainly recommend looking at that as a key value driver and certainly something that will make diligence easier if you're looking at selling in the next few years.” 

12. The bottom line … and what has buyers ‘drooling’

So, when is it time to sell? The decision is personal, but the bigger the business, the more options an owner will have. In general, companies below $5 million in EBIDTA could be targeted by consolidators, but will have fewer options and lower multiples.

The options expand as companies get to between $5 million and $10 million in EBITDA. They could be targeted as assets that add scale, or as a platform to grow by acquisitions of other businesses. North of $10 million in EBITDA is rarified air, and most of those companies in the trades have already been snapped up.

But at any size, a company’s growth potential, and the expansion story the company can tell, are key. 

Growing by acquisition, Mann says, is perfectly acceptable. And growth potential is what had investors drooling over Service Champions North. 

First, there is Champions University, an in-house academy that deployed 26 new HVAC technicians before the busy summer season.  

“(Investors) loved that story,” Comerford said. “Why? Because that's growth. I know it's a cost. I know it's an investment, it's a well-worth investment.”

And another factor in Comerford’s growth story? Service Champions North was bringing in $50 million in annual revenue despite being all HVAC. 

“The final thing for us was the interest that these private equity firms have in going to a multi-service platform,” Comerford says. “They look at my business, straight HVAC, and they're drooling. 

“They see plumbing opportunity, they see electrical opportunity. Why? Because I have these lists of customers who are already in my MVP maintenance program, who if I could just go and bolt on electrical or plumbing, I've got customers built right in.

“To me, that's the future.” 

And it’s built on growth. 


ServiceTitan is a comprehensive HVAC business software solution built specifically to help service companies streamline their operations, boost revenue, and achieve growth. Our award-winning, cloud-based platform is trusted by more than 100,000+ contractors across the country.

Ready to learn more about what ServiceTitan can do for your business? Contact our team to schedule a demo today.

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