The HVAC industry has been party to many trends over the last few years, one of which has been the influx of consolidation. Every day, news comes in about the latest acquisitions, and these purchases are not limited to HVAC services. In fact, many contractors seek to expand their service offerings by strategically looking for companies that might offer plumbing or electrical. But are these extra services enough? What else does an HVAC company consider before an acquisition?

According to Rob DiPietro, CEO of Air Pros, the No. 1 inspiration behind purchasing a company is culture fit. He said that more often than not, a deal will not go through if the company cultures are incompatible.

“There’s also what I like to call the ‘speed of playing.’ Some folks operate and haven't really wanted to change operations in 20 years, and some folks like to try new stuff all the time to grow and get better,” DiPietro added.

If the cultures are aligned and everyone is on the same page, he pointed out that sometimes it is easier to acquire smaller plumbing or electric companies than it is to train HVAC technicians in a completely different skill set. But when adding more and more companies, DiPietro said it is important to try to focus on having full integration, rather than just treating it as an aggregation of companies. Full integration encourages more uniform leadership across the acquired businesses.

“Whether we're in Alabama or Washington State or Texas, we try to have that same type of focus on customer experience everywhere we go and spend a lot of time training to that,” he said.

DiPietro added that anytime a company introduces some kind of change, it can become a bit of a distraction during the adjustment phase as new processes and people come in — but the results are worth it in the end. Patience is the key to success when looking to offer many different services.

Although integration is important, Nate Kukla, CEO of Unique Indoor Comfort, suggested that maintaining the integrity of the acquired brands is also crucial. He noted that when a company is acquired, it is usually done so because of its reputation in the community.

“The companies that are joining our team, they're not fixer-uppers. They're integrity brands, and they're very successful in their own right,” he explained. “From the consumer’s perspective, I don't think there's necessarily an advantage to them seeing everybody as the same company.”

Integration can come in forms other than rebranding, Kukla said, such as cross promotion and marketing or shared costs on services. The key, he said, is to let the businesses integrate organically — making changes too quickly can hinder the process.

One-Stop-Shop

For many, the goal of acquisition is to not only grow within a given community, but to become the go-to business for any of the customers’ needs.

From an employee perspective, Kukla noted that as a company expands, there are additional opportunities for HVAC technicians, plumbers, and electricians to learn each other’s trades. This helps foster growth not only in terms of the expansion of company services, but also self-growth for staff members who seek to learn more on the job.

Also beneficial to consumers, Kukla said becoming a “one-stop shop” provides companies with a great opportunity to build a strong relationship with homeowners.

“We call it the one call, one company philosophy. Our end goal is to provide all the essential home services to our customer base,” said Jarrod Brinker, chief strategy officer at Southern Home Services.

Brinker gave the example of Kansas City, where Southern Home Services bought a company that offers heating, air conditioning, and plumbing services. About five or six months later, it acquired another company, an air conditioning business that offers electrical and generator installation. With those two acquisitions in the same city, Kansas City homeowners now have more services available to choose from, said Brinker.

While acquiring companies provides a good way to expand services, Brinker noted that there is still value in hiring plumbers and electricians to a company’s staff.

“One way or the other, you're kind of making an investment when you think about it. Either you're paying the money to hire people and then advertise for that new service, or you're gonna pay that out in acquisition costs,” he said.

Although both methods end in the same results, Brinker said the route chosen depends on how much time a company has. He explained that it will likely take time to achieve a certain scale when growing services organically. Acquiring a company that already offers those services will be quicker, but he noted that it will usually cost more money.

Brinker said if a company is going to go the organic route, ownership should be aware of what they’re getting into. When running a business that boasts many service offerings, staff members such as a/c technicians, plumbers, and generator install teams all have to be managed differently — even down to the way their vehicles are stocked, he noted. Brinker said hiring an expert in the field can help ease the transition and build the new service offerings from a more knowledgeable standpoint.