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  1. #1
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    Question Should I Buy an MEP Company?!

    Hello Everyone!

    New to hvac-talk so I'm happy to be here.
    I am a business professional with 15+ years of business operations, advanced mechanical engineering degrees, business strategy development, business ownership, very hands-on mechanically inclined, and so on; but 0 years of working MEP experience.

    I have come across an MEP company for sale that I am considering to purchase. It does just over $10M in annual revenue, has very solid service contracts, and obviously a whole team of people at all levels of the organization. The current owners are completely absent from the day-to-day and therefore the business has been a little stagnant over the last several years.

    Is getting into this business with my lack of "official licensed technical" knowledge a bad idea?
    I know I am not bringing that knowledge to the table, and its not really what the business needs. Instead it needs some sound strategy development and execution, financial support for growth, and some good ol' fashion leadership.

    Any thoughts, words of wisdom, pitfalls to avoid, be sure to check before you buy, or any other feedback? Any insight would be greatly appreciated.

    Thank you for your help and I look forward to being on this forum for years to come!

  2. #2
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    10M sounds like you’ll have to make a sizable initial investment and continuing investment.
    I wouldn’t spend that kind of dough without a complete audit by a professional-is my advice. I would invest my money in more real estate.
    If I do a job in 30 minutes it's because I spent 30 years learning how to do that in 30 minutes. You owe me for the years, not the minutes.

  3. #3
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    Quote Originally Posted by STEVEusaPA View Post
    10M sounds like you’ll have to make a sizable initial investment and continuing investment.
    I wouldn’t spend that kind of dough without a complete audit by a professional-is my advice. I would invest my money in more real estate.
    Why would someone that can purchase a company with $10M in annual revenue care what we think ? If OP has a vision and burning desire to make it work that's all that's needed after investigating from top to bottom.

  4. #4
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    There's money to be made in this trade. Can you make it...I don't have a clue.
    Officially, Down for the count

    YOU HAVE TO GET OFF YOUR ASS TO GET ON YOUR FEET

    I know enough to know, I don't know enough
    Liberalism-Ideas so good they mandate them

  5. #5
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    You'll be totally reliant on the key people. What's your plan if a few leave (and take contacts)?

  6. #6
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    In my opinion, what you really need at the principal/executive/mgmt. level is a strong understanding of the construction industry in terms of inter-play with GCs, other subs, codes and permitting, etc. You don't need to be the technical expert...you need to employ those folks. But you do need to understand the big picture and what outside parties will impact your ability to secure jobs, execute on jobs, and eventually profit from those jobs.

  7. #7
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    Quote Originally Posted by oldguy1949 View Post
    Why would someone that can purchase a company with $10M in annual revenue care what we think ? If OP has a vision and burning desire to make it work that's all that's needed after investigating from top to bottom.
    If someone has that kind of dough, why would they come on the internet and ask strangers for advice...is the better question.
    I did mention 'complete audit'...
    If I do a job in 30 minutes it's because I spent 30 years learning how to do that in 30 minutes. You owe me for the years, not the minutes.

  8. #8
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    Quote Originally Posted by STEVEusaPA View Post
    If someone has that kind of dough, why would they come on the internet and ask strangers for advice...is the better question.
    I did mention 'complete audit'...
    Exactly what I was trying to say. Good sound business goes for 5 times revenue and up. That kind of business savvy to fund , those guys run more on instinct than advice from strangers. We on here know a lot but this is his go/no go .

  9. #9
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    Oct 2019
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    Quote Originally Posted by oldguy1949 View Post
    Why would someone that can purchase a company with $10M in annual revenue care what we think ? If OP has a vision and burning desire to make it work that's all that's needed after investigating from top to bottom.
    Two of my favorite quotes are...
    "You don't know what you don't know." AND "You can learn something from anyone."

    While I have been successful in other businesses, I am smart enough to know that it may not transfer well to all businesses. I came to this forum knowing there would be very knowledgeable and intelligent HVAC Business experts that may have something to teach me.

    Thanks for the reply.

  10. #10
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    Thread Starter
    Quote Originally Posted by btuhack View Post
    You'll be totally reliant on the key people. What's your plan if a few leave (and take contacts)?
    All successful businesses are always reliant on key people... people are the only thing that made them successful in the first place. The possibility of key people leaving is always a threat, no matter what business or stage of business you are in. The important thing is to not do something stupid that would make them want to leave! Ha.

  11. #11
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    Quote Originally Posted by JeepersKreepers View Post
    In my opinion, what you really need at the principal/executive/mgmt. level is a strong understanding of the construction industry in terms of inter-play with GCs, other subs, codes and permitting, etc. You don't need to be the technical expert...you need to employ those folks. But you do need to understand the big picture and what outside parties will impact your ability to secure jobs, execute on jobs, and eventually profit from those jobs.
    Great advice. Thank you for sharing.

  12. #12
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    Quote Originally Posted by oldguy1949 View Post
    Exactly what I was trying to say. Good sound business goes for 5 times revenue and up. That kind of business savvy to fund , those guys run more on instinct than advice from strangers. We on here know a lot but this is his go/no go .
    Thanks for the feedback. Simply trying to see/learn if there is anything I am not seeing. I have seen too many people get blinded by the numbers; and I'm just making sure I'm not getting blind.

  13. #13
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    Quote Originally Posted by STEVEusaPA View Post
    10M sounds like you’ll have to make a sizable initial investment and continuing investment.
    I wouldn’t spend that kind of dough without a complete audit by a professional-is my advice. I would invest my money in more real estate.
    A company with $10 million in annual gross will only sell for $0.06-0.08 on the dollar. What you are buying is customer base alone. That transaction price has to be supported by some real estate and capital assets to make it feasible.

    I believe he is asking us about the future market in the trade. Markets in MEP are cyclical just like every where else. When the economy is booming, so do we. The up side is that a well organized and managed service department can maintain minimum cash flow when construction sags. Most well established companies are setup so that service can keep essential personnel in place during downturns that affect construction. Then when the market recovers, the key players are still in place to hit the bandwagon spending early in the cycle.

    If you decide to do it, good luck. My first piece of advice is to hire a good GM quickly. Preferably one that has a good mix of trade and business experience.

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