Apex HVAC Services LLC

Valuation Range Analysis

ClearDeal applies market multiples to our normalized EBITDA figure — not the seller's stated SDE — to derive a defensible value range. The asking price of $1.8M sits above the indicated range and requires the commercial accounts to remain intact post-close to be justified.

Market multiples for profitable HVAC service businesses in the $2M–$5M revenue range currently trade at 3.5x – 4.5x adjusted EBITDA, depending on customer diversification, lease quality, and transfer risk. This business's customer concentration and owner dependency compress its multiple toward the lower end.

Normalized Financials & Add-Back Scrutiny

Top Red Flags — Ranked by Severity

Two commercial property-management contracts account for 41% of TTM revenue ($1,164K). Loss of either would materially impair EBITDA and debt-service coverage.

• Valley Property Group: $648K TTM (22.8% of revenue). Month-to-month contract. Relationship held personally by owner.
• SunState Facilities LLC: $516K TTM (18.2% of revenue). Annual contract renewing Jan 2026. No assignment clause confirmed.
• Neither account has a multi-year agreement with assignment provisions protecting the buyer post-close.
• Combined, these two accounts would represent 110%+ of ClearDeal's estimated normalized EBITDA if lost.

The owner personally manages all commercial bids over $5K and maintains direct relationships with three anchor equipment vendors. No documented handoff process exists.

• All 7 active commercial service agreements were originally sourced and signed by the owner.
• Daikin and Carrier authorized-dealer arrangements require annual owner sign-off; transfer provisions untested.
• No sales manager, CRM, or pipeline documentation. Buyer inherits an undocumented commercial sales function.
• Owner states a 6-month transition, but no penalty or escrow mechanism supports this commitment in the purchase agreement reviewed.

The primary shop lease and two service-vehicle leases carry personal guarantees. Shop lease expires February 2027 (18 months post-close) at a likely below-market rate.

• Shop at 4820 W. Camelback Rd: 3,200 sq ft at $2,200/mo. Lease expires Feb 28, 2027. Market comparable for same corridor: $3,400–3,900/mo.
• Annual rent reset at expiration could add $14,400–$20,400 to operating costs, compressing EBITDA by 3–5%.
• Assignment clause requires written landlord consent (30-day notice). Landlord consent not yet obtained.
• Two Ford Transit van leases ($1,180/mo each) signed personally by owner. Assumption in buyer's name requires lender approval.

No credit facility. Average AR days: 48. Peak-to-trough cash swing (July vs. January) historically exceeds $120K. Buyer may need bridge capital in the first quarter.

• July–August: revenue peaks (emergency A/C repairs), cash position highest.
• January–February: revenue trough (heating maintenance only), cash position lowest. Payroll continues.
• 3 commercial accounts pay net-60 or net-75, creating a structural AR gap against weekly payroll.
• No revolving credit facility in place. Buyer should plan for a $75K–$125K working capital reserve at close.

One lead technician (12-year tenure) performs or directly supervises 60% of residential service revenue. No retention agreement or non-compete exists.

• Marcus T. (name withheld, identified as Lead Tech in org chart) manages scheduling and parts procurement informally.
• No employment contract, non-solicit, or equity retention. Verbal assurance only.
• If Lead Tech departs post-close, buyer would need 3–4 certified replacements to maintain current throughput.
• EPA 608 certification and state refrigerant license held by 4 of 14 technicians; any departures narrow operational bench.

Operational Dependency Map

Commercial Sales

• Owner manages all commercial bids >$5K
• No CRM or documented pipeline
• 2 anchor accounts held personally by owner
• No inside sales or account manager in place

Field Operations

• Lead tech (12 yr) manages scheduling informally
• 60% of residential revenue flows through 1 person
• No deputy or succession plan
• EPA 608 bench: 4 of 14 certified

Vendor Relationships

• Owner re-qualifies Daikin & Carrier annually
• No formal authorized-dealer transfer provision
• Parts credit lines tied to owner personally
• 3rd supplier has verbal relationship only

Finance & Admin

• Owner's spouse manages AR/billing informally
• No documented billing procedures
• QuickBooks data partially reconciled
• No controller, CFO, or outsourced bookkeeper

30 Follow-Up Questions for the Seller

1. 01Can you provide the current service agreements for Valley Property Group and SunState Facilities, including any auto-renewal and assignment clauses?
2. 02When did each of those relationships begin, and have you introduced a buyer or key employee to those account contacts?
3. 03What would it take for either account to go to a competitor? Have they solicited other bids in the past 24 months?
4. 04Are either of these clients affiliated with individuals who know you personally or are they institutional accounts that follow vendor performance?
5. 05Would you accept a seller-note or earnout tied to the retention of these two accounts for 12 months post-close?

1. 01Who currently handles commercial sales calls and bid preparation when you're on vacation or unavailable?
2. 02Can you provide a written transition plan identifying which relationships you'll transfer in months 1–6, and how?
3. 03Are your Daikin and Carrier authorized-dealer agreements transferable to a new legal entity/owner? Have you confirmed this with your reps?
4. 04Would you be willing to commit to a 12-month consulting arrangement post-close, with a defined availability schedule and compensation?
5. 05Which three customers would be most at risk if you left on day 90? How would you mitigate that?

1. 01Have you spoken with your landlord about a lease assignment or new lease for the buyer? What was the response?
2. 02Is the current rent at market, below market, or above market in your view? Has the landlord indicated plans to reprice at renewal?
3. 03Can you provide the full lease agreement including any side letters, renewal options, and right-of-first-refusal clauses?
4. 04Who is the guarantor on the Ford Transit van leases, and what is the process for transferring those obligations?
5. 05Is there any unpaid CAM, property tax, or deferred maintenance on the shop premises?

1. 01The facility repair line has appeared for three consecutive years. Is this an ongoing maintenance budget or truly one-time? Can you provide the invoices?
2. 02What exactly does your brother provide under the $30K consulting engagement? Are there contracts, invoices, or deliverables?
3. 03Can you provide bank statements for the last 24 months to reconcile against the P&Ls provided?
4. 04Is your accounts receivable schedule current? What is the aging breakdown (30/60/90/120+)?
5. 05How do you define your TTM revenue — are there any deferred revenue items or pre-paid maintenance contracts included?

1. 01Does Marcus (lead technician) know the business is for sale? What is his employment arrangement, and would you expect him to stay post-close?
2. 02How many EPA 608 certified technicians do you currently employ? Are certifications company-paid?
3. 03What is your current technician turnover rate over the past 3 years?
4. 04What software do you use for scheduling, dispatch, and job costing? Is the data current and exportable?
5. 05What is your average job ticket size for residential vs. commercial work? How has that trended?

1. 01What is your typical cash balance at the January trough? Have you ever needed to defer payroll or rely on personal funds?
2. 02Have you ever had a credit facility, line of credit, or factoring arrangement? If not, why not?
3. 03How does your billing cycle work for commercial clients — net 30, net 60, net 75? Are there any penalty clauses for late payment?
4. 04What working capital amount do you propose to leave in the business at close? Is there a normalized working capital target in the LOI?
5. 05Are there any outstanding warranty claims, customer disputes, or unresolved service callbacks that could result in credits or re-work costs?