This is a summary of our very popular AHREXPO 2026 | Succession, Sale, or Scale: What’s Next up for your Business? education session
Moderated by Kerri Lee Sinclair, AutomatedBuildings.com, with speakers Brian Turner, CEO, OTI,
Scott Cochrane, President & CEO, Cochrane Supply, and Josh Reding, President, Sunbelt Controls
Every business owner eventually faces the question: what’s next? Whether you’re dreaming of a beach retirement, planning to pass the torch to family, or aiming to dominate your market, the path forward is rarely straightforward. A recent panel of industry experts, featuring voices from private equity, family-owned distributors, and successful contractors, gathered to cut through the complexity. They shared hard-won lessons on consolidation, the true value drivers for buyers, and how to prepare your company for its next chapter. If you missed the session, here are the essential takeaways to help you navigate your own journey.
Why Everyone is Calling You
If your phone has been ringing with offers to buy your business, you’re not alone. The HVAC and building automation space is incredibly attractive right now. Private equity firms are drawn to the industry because it’s fragmented and provides essential services that can’t be deferred. When a system breaks, it gets fixed.
At the same time, strategic buyers like larger contractors and distributors are looking to expand geographically and add talent. This flood of interest means owners have options, but it also changes the competitive landscape. If a family-owned competitor down the street sells, you’re not just competing with them anymore. You’re competing with a well-funded organization with new resources. This makes it critical to understand your own strategy, whether that involves selling, scaling, or staying the course.
The Three Pillars of a Successful Deal
Whether you’re selling to a private equity firm, a strategic partner, or bringing in a minority investor, one universal truth applies: alignment is everything. A deal isn’t just a financial transaction. It’s the start of a long-term relationship. To ensure success, you must be aligned on three critical dimensions.
- Value: This is the obvious one. You need to agree on what the company is worth today.
- Growth Strategy: How will the company grow after the deal? Does the buyer plan to roll up competitors, expand service offerings, or invest heavily in technology? Their vision for the future must match yours.
- Management Style: How will the business be run? Some investors are completely hands-off, while others have a detailed playbook. Understanding how you’ll work together on a daily basis is just as important as the price.
When these three things are in sync, deals tend to work out well. When they aren’t, it can be a difficult experience for everyone involved.
The “Sparkle Test”: Preparing for Your Close
If you’re considering a sale or investment in the next three to five years, you need to start preparing now. The panel stressed the importance of the “sparkle test.” This means making your business so attractive and well-organized that buyers compete for the privilege of owning it. This isn’t just about window dressing. It’s about running your business with discipline.
Key steps to pass the sparkle test include:
- Clean Up Your Books: Separate personal expenses from business expenses. That condo in Colorado or the luxury car for your spouse needs to be clearly distinguished from legitimate business costs. Buyers will look at your EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and adjust it for these personal expenses.
- Formalize Your Processes: Do you have a clear sales pipeline? Do you have signed contracts for your projects, or just emails and handshakes? Sophisticated buyers want to see a repeatable, predictable sales model. Running your business with a formal process proves you can hit your future numbers.
- Be Realistic About Projections: Be optimistic, but not ridiculous. If you’ve never grown more than 15 percent annually, don’t project 400 percent growth just because you get an influx of cash. Unrealistic projections lead to missed targets, devalued earn-outs, and strained partnerships. Be honest about your backlog, your recurring revenue contracts, and your historical performance.
Different Buyers, Different Motivations
Not all buyers are the same, and understanding their “why” is crucial to finding the right fit.
- Private Equity: Private equity firms are financial buyers. They are looking for well-performing companies with a strong leadership team that can scale. They bring capital, acquisition experience, and a network of resources. However, they typically want a majority stake and will expect you to stay on and execute the growth plan you presented. The goal is to build the company’s value for a future sale.
- Strategic Buyers (Contractors and Distributors): These buyers seek cultural and operational fit. They want to expand into new geographies or add capabilities. For them, the people and the culture are often more important than just the financials. They may offer a path for you to stay involved or transition slowly.
- Minority Investors: Some buyers may want to take a minority stake to help you grow without taking full control. This can be a great way to de-risk, bring in a partner with specific expertise, and scale your business while maintaining operational control.
Common Pitfalls to Avoid
The panel shared several cautionary tales to help you avoid common mistakes.
- Don’t Let the Deal Distract You from the Business: The single biggest mistake you can make is letting the M&A process consume you. You must continue to run your business and hit your numbers. If performance dips during the sales process, the buyer’s valuation will dip with it.
- Don’t Overvalue Your Business Based on Anecdotes: Getting a valuation from a CPA who doesn’t understand the M&A market can be disastrous. An unrealistic expectation can kill a deal. Use professionals who specialize in your industry to get a realistic picture of your company’s value.
- Don’t ignore the Future of Your Industry: When considering an acquisition, look at the market’s direction. Buying a company in a technology that is being phased out might seem like a cheap way to get customers. However, it’s often more expensive and more effective to market directly to those customers.
The Bottom Line
Whether your goal is to sell, scale, or secure a family legacy, the fundamentals are the same. The current market is full of opportunities, but it rewards those who are prepared.
The best advice from the panel was simple: start the conversation now. Take those cold calls, talk to potential partners, and invest time in learning about your options years before you need to make a decision. By focusing on building a strong, well-documented, and scalable business today, you aren’t just preparing for an exit. You’re building a more valuable company, no matter what the future holds.
