How do I check an HVAC service company’s reliance on one building owner?

Concentration is easy to miss when the customer list is sorted by building. One property owner may control a dozen addresses, each billed separately, and together they may be a very large part of the company. Ask for the figures grouped by owner or management company.

Then read the contracts. Look at how long they run, how they end, who can cancel and on what notice, whether pricing is fixed and whether the agreement can pass to a new owner. Ask your lawyer to review the transfer wording, since an owner who can walk away may have leverage over you after closing.

Ask about the relationship itself. Who deals with this owner, how often, and what do they say about the service? If it all rests on the seller personally, plan for a handover. Try to speak with the owner before closing, with the seller’s agreement. Finally, test the downside. If this owner left, which costs would shrink and which would not, and could you fill the technicians’ time with other work? Your accountant can help you build that picture from the financial statements. Ask also how long the relationship has lasted and whether its terms have changed.

Key takeaways

• Group revenue by owner or management company, not by building.
• Read termination, pricing and transfer clauses in that owner’s contracts.
• Test the downside by asking what would happen to costs and technician time if that owner left.