How do I check what share of an HVAC service company’s contracts auto-renew?

A seller’s summary will usually call most customers recurring. Your job is to separate agreements that renew automatically from those that simply tend to be renewed because a salesperson phones every year. The two behave differently when ownership changes.

Ask for the agreement list in a spreadsheet, then pull a sample of the signed contracts and read the renewal clause in each. Look for the notice period, whether a price increase needs consent, and whether the contract can be assigned to a new owner or needs the customer’s approval first. Your lawyer should read the assignment wording.

Next, compare the list against billing. If a customer shows as under agreement but has not been invoiced for the service in some time, the list may be out of date. Ask for cancellations at each renewal date, and the stated reasons. A few large customers on unusual terms can distort the picture, so ask which contracts differ from the standard form and who negotiated them. Finally, ask how much of the revenue sits on agreements versus one-off repair calls, and ask your accountant to confirm it from the financial statements.

Key takeaways

• Separate automatic renewals from agreements that renew only because someone makes a call.
• Read the assignment and price-change clauses in a sample of signed contracts.
• Match the agreement list against actual invoices to catch stale entries.