HVAC & Refrigeration Business Valuations
Independent valuations for air conditioning, mechanical services and commercial refrigeration businesses across Australia.
Green Standard values residential air conditioning installers, ducted and commercial HVAC contractors, and commercial refrigeration businesses. Two of them can report the same profit and be worth very different amounts, because one earns it from agreements that renew and the other from a hot summer.
A refrigeration contractor with planned maintenance across supermarkets, cold rooms and food manufacturers, and a roster that answers a breakdown at two in the morning, is a different asset from a split system installer whose year depends on a heatwave and two developers. The first is paid for keeping customers cold. The second is paid for how many units went up before the weather turned.
We examine the agreements, the licences, the technicians, the customers and the equipment, then form a view on the earnings a new owner could reasonably expect to keep.
How much is a hvac & refrigeration business worth?
An HVAC or refrigeration business is worth what its maintainable earnings support after a market wage is paid for the owner’s own work, adjusted for how likely those earnings are to continue under a new owner. Planned maintenance agreements and licensed technicians support a higher value than install work that follows the weather and a few builders. Because one hot summer can distort a result, a valuer looks at several years rather than the latest one.
HVAC & Refrigeration businesses we value
What affects the value of an HVAC or refrigeration business?
These are the questions we work through when we value an HVAC and refrigeration business. Some raise value, some reduce it, and most matter only in combination with the others.
Revenue quality
Planned preventive maintenance
Scheduled filter, coil, belt, refrigerant and safety checks recur because equipment owners need their systems to keep running. We look at the number of sites and units under agreement, the price per visit, the renewal history, and how often a routine visit leads to repair and replacement work.
Service agreements and breakdown work
Breakdown work carries good margins but follows the weather, while agreement customers usually get priority response, which makes them harder to lose. We separate agreement, call-out and install margins, because a buyer will price each stream differently.
Install volumes and seasonality
Split system installs bunch ahead of summer and in heatwaves, and a cold snap does the same for heating, which leaves unused technician capacity in the quiet months. We look at monthly install counts over several years, so that one unusually hot or mild summer does not set the earnings we adopt.
Ducted and larger residential projects
Ducted systems bring higher job values but need design, longer lead times and a warranty tail. We check how accurately jobs are quoted, the margin achieved against the margin estimated, and the callback cost after installation.
Builder and developer work
Mechanical subcontracts for builders and developers are fixed-price, paid on progress claims and often subject to retentions. We consider the number of builders, payment history, and exposure to a builder’s financial failure.
People and licences
Refrigerant handling licences
Handling refrigerant requires a licence held by the individual, and the business generally needs authorisation under the same national scheme, run through the Australian Refrigeration Council and its ARCtick program. We check who holds what, whether each licence is current, and what a buyer would need to hold to keep trading.
Technician depth and trade licences
Many jobs also involve electrical connection or gas work, which are licensed separately by each state. Technicians who combine refrigeration with electrical or gas qualifications are hard to hire and expensive to replace, so we look at tenure, licence mix and wages.
Owner role
In many small businesses the owner is the lead technician, the estimator and the person the facilities manager calls. We deduct a market cost for that role and ask which relationships would stay if the owner left.
Apprentices and subcontract installers
Peak season often brings subcontract installers in to cover demand. We consider how much work depends on them, what they are paid, and whether the arrangement would continue after a sale.
Customers and relationships
Customer concentration
One supermarket group, food manufacturer or facilities management company can account for a large share of refrigeration revenue. We measure that over several years, because losing one account affects both revenue and the technician hours behind it.
Facilities managers and national accounts
Work won through a facilities management company is usually paid at rates the company sets and is re-tendered on a cycle. We look at the rates, payment terms, incumbency and what the contract says about subcontracting and change of control.
Contract terms
We read length remaining, response-time commitments, penalties for missed response, renewal history and any clause that lets the customer end the agreement on a change of ownership.
Manufacturer and supplier relationships
Dealer or authorised installer status, warranty authorisation and supplier-referred leads can bring in work and protect margin on equipment. We check which of them are held by the business, and which would be lost on a sale.
Assets and operations
Specialist equipment and vehicles
Recovery units, vacuum pumps, leak detectors, brazing and nitrogen sets, thermal cameras, access platforms and fitted-out vans are needed to earn the profit. We consider condition, calibration, finance owing and the cost of keeping the fleet current.
After-hours response
Food and cold chain customers expect a technician to answer a failed cold room at any hour, so the roster, on-call allowances and response record are part of what the customer is buying. We check how the roster runs and whether it depends on the owner personally.
Refrigerant transition and stock
Refrigerant gases are being phased down and replaced, and some replacements need additional training and equipment. We look at what refrigerant stock is held, the cost of training and tooling for newer gases, and records of leak checks and refrigerant use.
Warranty and callbacks
Failed installs and early compressor or coil faults are costly, and the cost can be recovered from manufacturers only in part. We look at the callback history, how manufacturer claims are paid, and any rectification outstanding at the valuation date.
How a buyer reads an HVAC or refrigeration business
Buyers include larger mechanical services and facilities groups expanding into a new area, refrigeration specialists adding cold chain accounts, and senior technicians buying their way into ownership. Each is asking the same thing in a different way: how much of this profit will still be here once the current owner has gone?
Businesses with documented planned maintenance, a stable group of dual-qualified technicians, an after-hours response that runs without the owner and customers in food and cold chain tend to attract the widest interest. Install-heavy businesses whose profit follows the weather, or that depend on one developer or on the owner’s own licence, are usually priced more cautiously, even when a recent summer produced high profits.
A valuation works through the same questions, but independently and with the reasoning written down.
Adjustments we often make in hvac & refrigeration businesses
Reported profit is restated to what the business earns on a commercial footing before any method is applied. Every adjustment is listed in the report.
Owner wages
Replacing drawings, or a salary set for tax reasons, with a market cost for the work the owner actually does, including estimating and on-call duty.
Family members on payroll
Wages paid above or below market rate, or for roles that a buyer would not need.
Vehicles used privately
Private use of business vehicles, and private vehicles run through the business.
Related-party premises
A workshop or warehouse owned by the owner’s family trust or super fund and rented at other than market rent.
Weather-driven peaks
An unusually hot summer or cold winter that lifted install and breakdown revenue above the level maintainable in an average year.
One-off projects
A single large mechanical or refrigeration project, or a builder relationship that has ended, that would distort maintainable revenue.
Refrigerant price movements
Gains or losses from holding refrigerant stock when prices moved sharply, separated from the margin earned on the work.
Information we typically review
You upload documents through the secure client portal after the engagement is confirmed. We send a list specific to your business; nothing needs to be gathered before the intake.
The financial pack
- Profit and loss statements, usually the last three years and the current year to date
- Balance sheets for the same periods
- Tax returns where relevant
- Payroll summary and employee information
- Vehicle, plant and equipment schedules
- Major customer information
- Recurring contracts and service agreements
- Revenue breakdown by service line
- Owner remuneration and drawings
- Unusual or non-recurring income and expenses
For a hvac & refrigeration business, also
- Revenue split by stream: installs, planned maintenance, breakdown and call-out, and projects
- Service agreement register: sites, units, visit frequency, price and renewal date
- Refrigerant handling licences and business authorisation details, with expiry dates
- Top ten customers by revenue for the last three years, including food, cold chain and facilities management accounts
- Monthly install counts and revenue for the last three years
- Technician list with refrigeration, electrical and gas licences, tenure and wage
- Specialist equipment, vehicle and access platform schedule, including finance owing and calibration records
- Refrigerant purchase, use and stock records
- Warranty claims and callback register, including manufacturer recoveries
- Dealer or warranty authorisation agreements with manufacturers
- Work in progress, retentions held by builders and debtor ageing
What a hvac & refrigeration business valuation costs
Fixed fees, confirmed in writing before work begins. The standard fee applies to most established hvac & refrigeration businesses.
Independent Business Valuation
$1,995+ GST
For established trade and field-service businesses requiring an independent valuation.
- Review of financial information
- Normalisation of earnings
- Valuation methodology selected for the business and purpose
- Industry and business risk assessment
- Consideration of plant, vehicles and equipment
- Owner dependency assessment
- Goodwill analysis
- Valuation range and conclusion
- Professionally prepared valuation report
- Draft provided before finalisation
Accountant and Adviser Partner
$1,495+ GST
For accountants and professional advisers who refer valuation matters regularly.
- Streamlined client onboarding
- Adviser kept informed with client authority
- Independent report addressed to the client
- Secure document portal for the client
- Repeat-client workflow
- Partner pricing on every referred matter
Complex Valuations
From$2,995+ GST
For matters with more moving parts. Quoted as a fixed fee in writing before work begins.
- Multiple entities or divisions
- Significant plant and equipment
- Unusual ownership structures
- Partnership and shareholder disputes
- Complex normalisations
- Significant customer concentration
- Historical valuation dates
Fees are fixed and confirmed in writing before work begins.
HVAC & Refrigeration valuations: common questions
How much is an HVAC or refrigeration business worth?
It is generally worth what its maintainable earnings support after a market wage is paid for the owner’s work, adjusted for how much of those earnings would continue under a new owner. Planned maintenance agreements, licensed technicians and food and cold chain customers support a higher value; dependence on a hot summer, a developer or the owner reduces it. Our guide on how trade businesses are valued explains the method.
We install far more than we service. Does that reduce the value?
Often, yes, because install revenue has to be won again each season and depends on weather and building activity, while service revenue tends to repeat. It does not make the business hard to value. We separate the two streams and weigh them differently, and an install business with a growing service base is valued as one that is building its recurring revenue.
Do our refrigerant licences matter to a buyer?
Yes, because refrigerant work cannot be done without them. A buyer needs the business and its technicians to hold the right authorisations, and the rules on what passes with a sale depend on the scheme and how the sale is structured. We identify who holds each licence and a buyer should confirm the position with the Australian Refrigeration Council.
Our profit jumped after a very hot summer. How do you treat that?
We look at several years of install counts and breakdown work, then adopt a level of earnings that would be reached in an average year. A hot summer is a real event and the business did earn the profit, but a buyer will not pay as though every summer will be the same. The report sets out the years used and why.
Related industries and guides
Valuing a hvac & refrigeration business? Start with a short intake.
An Independent Business Valuation is $1,995 + GST, with a draft before the report is finalised. Typical turnaround is 3 to 7 business days once all required information has been received.