Confidential Information Memorandum · Illustrative
Sunbelt HVAC
Residential and light commercial HVAC services · Southeast US · 17 years in operation
Confidentiality. This document is provided for the exclusive use of the recipient and may not be reproduced or distributed without prior written consent. The information contained herein has been prepared solely to assist prospective acquirers in evaluating a potential transaction. Recipients are bound by the Non-Disclosure Agreement executed prior to receipt.
Contents
1. Executive Summary
Sunbelt HVAC ("the Company") is a 17-year-old residential and light commercial heating, ventilation, and air conditioning services provider headquartered in the Southeast US, generating $14.3M in trailing revenue and $2.6M in adjusted EBITDA (18.2% margin). The Company has compounded revenue at 12% annually over the past three years, materially above the 6-8% growth rate of the broader Southeast residential HVAC services market.
The business operates a service-led model with a 40% recurring-revenue base from approximately 4,200 active residential maintenance contracts and 180 light commercial preventive maintenance agreements. Service mix is 65% residential and 35% light commercial. The Company employs 62 staff including 38 licensed technicians, operates a fleet of 32 service vehicles, and serves a metropolitan service area within 60-mile radius of the headquarters.
The owner has determined to explore a strategic transaction to capitalize on continued consolidation in the residential HVAC services sector. The Company is well-positioned to attract interest from the active set of HVAC roll-up consolidators — both PE-backed platforms and strategic acquirers — given its scale, profitability, and growth trajectory. A ranked list of 18 likely buyers with acquisition history and contact path is included as a supplement in Section 10.
2. Investment Highlights
Above-market growth in a consolidating sector
The Company has grown revenue at a 12% three-year CAGR (vs. 6-8% market) while expanding EBITDA margin from 14.5% to 18.2%. Growth has been entirely organic, driven by ticket-size expansion and maintenance-contract penetration. The Southeast US HVAC services market is in the middle innings of PE-led consolidation, with active acquirer demand from Wrench Group, Apex Service Partners, Astara, Service Champions, and family-office-backed regional platforms.
40% recurring revenue base
Approximately $5.7M of revenue comes from contracted maintenance agreements: 4,200 residential ($1,100 average annual contract value) and 180 light commercial ($5,500 average annual contract value). Maintenance contract retention has averaged 89% over the past three years. Recurring revenue commands premium valuation multiples in HVAC services transactions.
Scale advantages relative to typical roll-up targets
HVAC consolidators typically target $3-15M revenue businesses for roll-up tuck-ins. Sunbelt HVAC sits at $14M+ revenue with consolidated branding, established processes, and a digital-forward service-dispatch platform — meaningfully more sophisticated than the typical small-acquisition target. The Company is positioned as either a meaningful tuck-in for an existing platform or an anchor acquisition for a regional platform launch.
Diversified residential / light commercial mix
65/35 revenue split between residential and light commercial reduces concentration risk that a single-segment business carries. Light commercial work tends to be higher-margin and lower-customer-acquisition-cost; residential drives volume and brand recognition.
Technician retention well above industry norms
Technician turnover has averaged 8% annually over the past three years versus the 18-22% HVAC industry norm. The Company runs an in-house apprenticeship program (4 active apprentices) and a formal technician career-ladder framework. Strategic acquirers value this for both labor-cost stability and operational continuity through ownership transition.
Clean operational and financial systems
ServiceTitan implemented company-wide for dispatch, customer relationship management, and field service automation. QuickBooks Enterprise plus a separate inventory management system for the parts depot. CPA-reviewed financials for the trailing three years. Quality-of-earnings-ready post a normalization pass.
3. Company Overview
History and milestones
Sunbelt HVAC was founded in 2008 by the current owner-operator as a single-truck residential service operation. Over seventeen years the Company has grown through a series of operational milestones: addition of the first commercial service contract in 2011, transition to a multi-truck dispatched-service model in 2013, ServiceTitan implementation in 2017, opening of a dedicated parts depot in 2019, and a 2022 brand consolidation that unified three separate marketing identities under the Sunbelt HVAC name.
Services and revenue lines
The Company operates four primary service lines:
- Residential repair and replacement (45% of revenue). Diagnostic service calls, equipment repair, and HVAC system replacement for single-family homes. Service-call ticket size averages $470; full-system replacement averages $11,200.
- Residential maintenance contracts (20% of revenue). 4,200 active contracts at $1,100 average annual value. Two-visit annual cadence (spring AC tune-up, fall heating tune-up). 89% renewal rate.
- Light commercial service and maintenance (35% of revenue, blended). Mix of repair calls, preventive maintenance contracts (180 active agreements), and equipment retrofit projects. Target customers: small office buildings, retail strip centers, restaurants, light manufacturing facilities.
- Indoor air quality (IAQ) and accessory sales (within service line revenue). Air purifiers, humidifiers, UV systems, smart thermostats. Approximately $1.1M annual revenue at 38% gross margin.
Geographic footprint
The Company serves a metropolitan Southeast US market with a 60-mile service radius from a single headquarters / parts depot. The service area includes approximately 1.2 million households and 35,000 small commercial properties. Within the addressable market, Sunbelt HVAC has approximately 4% residential market share and 2% light commercial market share. The market is fragmented; the top five competitors collectively hold less than 25% combined share.
Brand and customer acquisition
The Sunbelt HVAC brand has been built through a combination of direct response advertising (Google Ads, Facebook), strategic neighborhood marketing (yard signs, door hangers after job completion), partnership channels (real estate agents, home inspectors, property managers), and organic referral. Approximately 35% of new residential customers come from referrals or repeat business. Net Promoter Score (last measured Q3): 67.
4. Market & Competitive Landscape
Industry context
The US residential HVAC services market is approximately $115 billion in annual revenue, growing at 6-8% annually driven by housing stock aging (median US home age now over 40 years), climate change driving cooling intensity, and broad adoption of higher-efficiency replacement systems (DOE 2023 minimum efficiency rules drove a wave of replacement activity). Light commercial HVAC services adds approximately $40 billion in annual revenue, growing 5-7%.
The market is highly fragmented — an estimated 75,000 HVAC contractor businesses operate in the US, with median revenue under $2M. The top 50 consolidated platforms combined hold under 20% market share, creating substantial roll-up opportunity that PE has been actively pursuing since 2018.
Consolidation dynamics
PE-led HVAC services consolidation accelerated meaningfully after 2018. Notable platforms launched or scaled in the past 7 years include Wrench Group (KKR, 2018), Apex Service Partners (Alpine Investors, 2019), Astara (initially Permira, later additional sponsor activity), Service Champions (Sun Capital), and Sila Services (Morgan Stanley Capital Partners). Public strategic acquirers including ARS / Rescue Rooter (Onex-owned), Authority Brands (Apax / Roark), Neighborly (KKR), and Service Experts (BlackRock) have all been active acquirers as well.
Typical platform acquisition criteria: $5-30M target revenue, $1-5M EBITDA, established maintenance-contract base, technician retention above industry norms, ServiceTitan or comparable field-service platform in place, owner willing to support 12-24 month transition. Sunbelt HVAC meets all of these criteria comfortably and exceeds the typical scale by 2-3x.
Competitive position within service area
Within the Company's 60-mile metropolitan service area, the competitive landscape includes:
- Three regional consolidator-owned operations (combined ~18% market share)
- Approximately 200 independent contractors of varying size (combined ~70% market share, individual share <1% each)
- National brands operating via local franchises (~7% market share)
- The remaining ~5% split across home-builder service arms and equipment-manufacturer-branded service
Sunbelt HVAC has consistently won customer-satisfaction recognition (Angi Super Service Award six consecutive years, BBB A+ rating, 4.8-star average across Google reviews with 1,400+ reviews). Brand recognition within the service area is approximately 38% aided (Q3 brand awareness survey).
5. Revenue & Customer Profile
Customer mix and concentration
The Company serves a deliberately diversified customer base with low concentration risk. Approximately 12,800 active residential customer relationships (defined as a service interaction or active maintenance contract within trailing 24 months) and 740 active light commercial accounts. The top 20 light commercial accounts represent approximately 14% of total revenue; no individual customer exceeds 2% of revenue.
Recurring revenue detail
| Maintenance contract segment | Contracts | Avg annual value | Annual revenue | Renewal rate |
|---|---|---|---|---|
| Residential — Standard plan | 3,100 | $890 | $2.76M | 87% |
| Residential — Premium plan | 1,100 | $1,690 | $1.86M | 93% |
| Light commercial — Basic PM | 120 | $3,400 | $408K | 88% |
| Light commercial — Full PM | 60 | $8,900 | $534K | 94% |
| Total maintenance recurring | 4,380 | — | $5.57M | 89% |
Customer acquisition and unit economics
Blended customer acquisition cost (CAC) for new residential customers: approximately $185 per acquired customer (combined paid media, channel partnerships, and referral incentives). Average residential customer lifetime value (LTV) at current retention rates and ticket sizes: approximately $4,200 over a five-year horizon. LTV/CAC ratio of 22.7x is substantially above the 3-5x typical of customer-acquisition-led businesses.
Revenue seasonality
Service-line revenue is seasonal but the maintenance-contract base smooths the curve. Q2 (April-June) and Q3 (July-September) combined typically represent 58-62% of annual revenue driven by cooling-season demand. Q1 (January-March) is the lowest-revenue quarter at approximately 18% of annual revenue. Maintenance contracts are paid in advance on an annual or semi-annual basis, providing working capital and visibility into renewal cycles.
6. Operations & Team
Organization
The Company employs 62 full-time staff organized into five functional groups: Service Operations (40 staff including 38 technicians and 2 dispatch supervisors), Sales and Customer Care (8 staff handling inbound calls, quote management, and contract renewals), Light Commercial Sales (4 outside sales reps), Parts and Logistics (6 staff including the parts depot manager), and Administration / Finance (4 staff). Two key managers report directly to the owner: a Director of Operations (8 years tenure, 12 years prior HVAC industry experience) and a Service Manager (6 years tenure).
Technician program
The Company runs an in-house technician development program. New hires complete a structured 90-day onboarding combining classroom instruction (refrigerant certification, electrical safety, customer-interaction training) and ride-along field experience with senior technicians. Apprentices are matched 1:1 with a Senior or Master Technician for a 24-month progression to journeyman status. The program currently has 4 active apprentices and has graduated 7 technicians to journeyman status over the past three years.
Facilities
Single headquarters / parts depot leased on a 10-year lease (5 years remaining) at $14/sqft fully loaded for 18,000 sqft. The facility houses the dispatch operations center, the parts depot (approximately $380K in inventory at any given time), a technician training room, and administrative offices. The fleet of 32 service vehicles is owned outright; average vehicle age is 4 years and the Company maintains a rolling 5-year vehicle replacement schedule budgeted at approximately $180K annually.
Systems and technology
ServiceTitan implemented in 2017 and substantially built out since: dispatch automation with optimization for technician skill and customer proximity, customer relationship management, automated reminders for maintenance-contract visits, integrated quoting and signature capture in the field, recurring billing automation, and a customer self-service portal. QuickBooks Enterprise for accounting, integrated with ServiceTitan for revenue recognition. Inventory management on a separate dedicated system with daily ServiceTitan integration for parts consumption.
Licensing and compliance
The Company holds all required state and local HVAC contractor licenses. Technicians hold EPA Section 608 refrigerant handling certifications as required. Workers' compensation, general liability, and vehicle insurance coverage are current with industry-standard limits. No active or pending litigation. No environmental, OSHA, or other regulatory citations in the trailing five years.
7. Financial Performance
| Metric ($M unless noted) | Year -3 | Year -2 | Year -1 | TTM |
|---|---|---|---|---|
| Revenue | $10.2 | $11.6 | $12.9 | $14.3 |
| Revenue growth % | — | 13.7% | 11.2% | 10.9% |
| Cost of services | $6.4 | $7.1 | $7.7 | $8.4 |
| Gross profit | $3.8 | $4.5 | $5.2 | $5.9 |
| Gross margin % | 37.3% | 38.8% | 40.3% | 41.3% |
| Operating expenses | $2.3 | $2.5 | $2.7 | $3.3 |
| Reported EBITDA | $1.5 | $2.0 | $2.5 | $2.6 |
| EBITDA margin % | 14.7% | 17.2% | 19.4% | 18.2% |
Adjusted EBITDA bridge (TTM)
| Item | Amount | Note |
|---|---|---|
| Reported EBITDA | $2,600,000 | Pre-adjustment |
| Owner compensation normalization | $180,000 | Adjust owner salary to market-rate replacement (assumed CEO at $220K) |
| Owner personal vehicle / fuel | $24,000 | Personal-use portion of company-paid expenses |
| Owner family member compensation | $45,000 | Family member paid as W-2 with limited active role |
| One-time legal fees (2024) | $32,000 | Contract dispute resolved in Company's favor |
| Charitable contributions (discretionary) | $18,000 | Owner-directed charitable giving |
| Above-market rent adjustment | $0 | Rent at market; no adjustment |
| Adjusted EBITDA | $2,899,000 | 20.3% adjusted margin |
Working capital and capex
Working capital is favorable due to the maintenance-contract advance-pay structure. Days sales outstanding (DSO) average 14 days for service work and effectively negative for prepaid maintenance contracts. Days inventory outstanding (DIO) average 22 days on parts inventory. Annual capex averages $220K (vehicle replacement $180K, equipment and tools $40K). Working capital plus capex represent approximately 2.5% of revenue.
8. Growth Opportunities
Specific growth levers a strategic acquirer could deploy to expand value post-transaction.
Geographic expansion
The current 60-mile service area covers approximately 25% of the addressable market within a 120-mile radius. A platform acquirer with capital and operational playbook could expand the service area to a 90-120 mile radius over 24-36 months, adding satellite operations supported by the existing parts depot and dispatch infrastructure. Estimated incremental revenue at full ramp: $8-12M annually.
Tuck-in acquisitions within service area
Approximately 25 independent contractors of relevant scale ($1-5M revenue) operate within the existing service area. A platform acquirer using Sunbelt HVAC as the anchor could execute 3-5 tuck-in acquisitions over 36 months, each at typical platform multiples (4-6x EBITDA) and integrating into the existing dispatch, brand, and back-office infrastructure. Estimated cumulative tuck-in revenue: $12-25M with platform synergies.
Maintenance-contract penetration
Current residential maintenance-contract attach rate on service-call customers: approximately 22%. Industry best-in-class is 35-45%. A targeted attach-rate improvement campaign could lift contracts from 4,200 to 6,500-7,000, adding $2.5-3M in high-margin recurring revenue. Multiple consolidator platforms have demonstrated this playbook successfully (Wrench, Apex).
Light commercial expansion
Light commercial is currently 35% of revenue. The segment has higher gross margin and lower customer-acquisition cost than residential. A targeted business-development effort focused on small office, retail, and restaurant accounts could expand light commercial to 45-50% of mix over 36 months, lifting blended margin 200-300 basis points.
Indoor air quality and accessory upsell
IAQ products and accessories currently represent approximately $1.1M revenue. Industry attach data suggests $2-3M is achievable with structured upsell training and ServiceTitan flag automation for system-replacement opportunities.
Pricing and margin expansion
Pricing benchmarking against regional consolidator platforms indicates Sunbelt HVAC service rates are approximately 8-12% below platform-acquired peers. A measured pricing migration over 12-18 months could lift gross margin 150-200 basis points without material customer impact, leveraging brand premium and service-quality differentiation.
9. Transaction Considerations
Transaction structure
The owner is open to both stock and asset structures, with preference informed by tax and indemnity considerations to be finalized with tax counsel. Working capital target will be established based on a trailing-12-month average. The Company carries minimal debt; no significant working capital normalization expected.
Owner transition
The owner is prepared to support a 12-24 month transition under an earn-in arrangement, with specific terms negotiable. The Director of Operations and Service Manager have indicated willingness to continue under new ownership with retention compensation. Both managers are essential to operational continuity and acquirer comfort.
Real estate
The headquarters / parts depot facility is leased; lease has 5 years remaining and assumability is confirmed with the landlord. Real estate is not part of the transaction.
Expected timeline
The Company is targeting a definitive agreement within approximately 6-9 months from the launch of formal outreach, with close 60-90 days after definitive agreement subject to financing and regulatory closing conditions. The process will be run with the goal of generating sufficient indication-of-interest depth to support a competitive final round.
Confidentiality
Material non-public information including financial detail, employee information, customer concentration specifics, and tactical operating data is shared only with parties under signed NDA. Customer-facing communication regarding the transaction will be coordinated between the seller and selected acquirer to manage employee and customer retention through the transition.
10. Buyer Profiles Report (supplement preview)
The CIM includes a supplemental Buyer Profiles Report identifying ranked likely acquirers with public acquisition history and rationale. Below is a preview of 18 buyers across the four major HVAC acquirer categories. The full Buyer Profiles Report (included with the $399 Full CIM or the $499 Complete Deal Package) ranks 50 buyers across the full HVAC consolidation landscape with per-buyer activity, deal-size profile, and contact path.
Tier 1 — Large PE-backed HVAC platforms
Wrench Group
PE platform · KKR-backedLeading US HVAC services consolidator backed by KKR since 2018. Highly active acquirer with 25+ disclosed acquisitions across the Southeast, Texas, Mid-Atlantic, and Pacific markets. Recent activity includes brand acquisitions in Atlanta metro, Charlotte, Nashville, and Tampa — Sunbelt HVAC's service area fits squarely within Wrench's expansion target. Acquisition criteria align: $5-30M revenue, >15% EBITDA margin, maintenance-contract base, ServiceTitan-equipped. Contact path: corporate development team.
Apex Service Partners
PE platform · Alpine InvestorsAlpine Investors-backed HVAC, plumbing, and electrical services platform launched in 2019. Aggressive acquisition pace with concentration in the Southeast and Sun Belt markets. Apex prefers acquisitions with strong owner-operator legacy brands that retain identity post-acquisition. Sunbelt HVAC's brand consolidation strategy fits Apex's playbook. Sweet spot is $5-25M revenue, 15-25% EBITDA margin. Contact path: M&A team.
Astara
PE platform · Permira-relatedAtlanta-headquartered HVAC services roll-up with active acquisition activity across the Southeast since 2020. Less-publicized than Wrench and Apex but a credible acquirer for properly-sized Southeast targets. Sunbelt HVAC's geography is directly adjacent to Astara's existing operating base. Contact path: founders / corporate development.
Sila Services
PE platform · Morgan Stanley Capital PartnersMorgan Stanley Capital Partners-backed home services platform with growing Southeast presence. Acquires multi-service or HVAC-focused operations with $5-25M revenue. Public M&A activity has included acquisitions in North Carolina, Florida, and Georgia. Contact path: M&A team.
Service Champions
PE platform · Sun CapitalSun Capital Partners-owned HVAC and plumbing services consolidator. Acquires regional service operations and integrates under Service Champions or sub-brands. Active acquisition history in California, Texas, and Sun Belt geographies. Contact path: corporate development.
Tier 2 — Strategic acquirers and franchise platforms
ARS / Rescue Rooter
Strategic · American Residential Services (Onex)One of the largest US residential HVAC services operators, owned by Onex Corporation. Active in market-share consolidation through acquisition. Acquires established regional operators that fit branded operating model. Sunbelt HVAC scale and profitability fit ARS acquisition profile.
Authority Brands
Strategic / franchise · Apax / RoarkRoark Capital-owned home services franchise platform. Acquires established service operators to either franchise-license under existing brands or operate as platform additions. Acquisition activity tied to franchise expansion strategy. Contact path: corporate development.
Neighborly
Strategic / franchise · KKRKKR-owned home services franchise platform with HVAC representation through the Aire Serv brand. Acquires regional service operations for franchise conversion or platform consolidation. Active acquirer with strong M&A discipline.
Service Experts Heating & Air Conditioning
Strategic · BlackRockBlackRock-owned HVAC services consolidator. Acquires regional residential and commercial HVAC operators for integration into national platform. Active in market-share expansion. Sunbelt HVAC profile fits typical acquisition target.
Tier 3 — Public strategic acquirers
Comfort Systems USA (NYSE: FIX)
Strategic · PublicPublic commercial HVAC services consolidator. Primary focus on commercial / institutional / industrial work, but selectively acquires light commercial operators with strong commercial service mix. Sunbelt HVAC's 35% light commercial mix is on the threshold for FIX's interest profile.
EMCOR Group (NYSE: EME)
Strategic · PublicPublic mechanical contractor with HVAC services as a meaningful segment. Acquires regional specialty contractors for commercial market consolidation. Lower probability fit given residential mix dominance at Sunbelt; included for completeness.
Tier 4 — Family offices and search funds
Trive Capital · HVAC services platform
PE · Lower-middle marketTrive has invested in lower-middle-market services platforms including HVAC. Direct investment for platform anchor or partnership with operating leadership for consolidation play.
Audax Group · HVAC services investments
PE · Middle marketAudax has multiple HVAC-related platform investments and is a credible acquirer at the $15-25M revenue range. Both anchor-acquisition and platform-bolt-on scenarios are plausible fits.
Riverside Company · Services platforms
PE · Middle marketRiverside has historically invested in HVAC and related home services platforms. Acquisition criteria align with Sunbelt HVAC profile. Patient capital with track record of multi-year consolidation strategies.
Berkshire Partners · Services investments
PE · Middle marketBerkshire Partners has invested across services categories with relevance to HVAC consolidation. Larger platform target than typical for Sunbelt; included as potential consortium partner.
Search fund anchor opportunity
ETA · Individual operator + investor consortiumSunbelt HVAC scale and quality fit the search-fund profile for operators leading entrepreneurship-through-acquisition transactions. Stanford GSB and HBS search-fund operators have closed HVAC services acquisitions in the $10-20M revenue range with attractive structures for the seller.
Family office direct acquirer (anonymized)
Family office · Direct platformMultiple Southeast-based family offices have built or are building HVAC services platforms through direct acquisition. These are less-publicized but credible buyers with patient capital and willingness to support 12-24 month owner transitions. Contact path via service-industry network.
Regional independent acquirer (anonymized)
Strategic · Regional consolidatorSeveral regional Southeast HVAC operators have indicated active consolidation activity in the $10-25M revenue acquisition range. These are typically owner-operator-led businesses pursuing geographic or service-line expansion. Contact path via industry networks and trade associations.
The full Buyer Profiles Report (included with the $399 Full CIM and the $499 Complete Deal Package) ranks 50 buyers across all four tiers with deeper per-buyer activity history, deal-size profile, geographic preference, contact paths, and likely-fit scoring.