HVAC Platform

A company in the Residential HVAC industry with $20 million in revenue and $2.3 million in EBITDA approached Attract Capital to help them secure acquisition financing.  The owner wanted a lender that would fund based on his rollover equity value and not require significant cash equity to fund acquisitions. The company had a large amount of acquisition activity planned and needed the right lender to support their aggressive roll-up.  We structured the acquisition financing based on the future EBITDA of the Company and created a structure that could be drawn flexibly, as acquisition funding dictated.  In the first part of this engagement, we raised a $20 million facility to refinance and fund six acquisitions.  This increased revenue to $42 million and EBITDA to $7.2 million within a two-year period.  This was all accomplished with the owner putting in a very small amount of cash equity. 

Despite the Company’s performance and successful acquiring, this lender adopted a non-supportive attitude due to the Company’s financial reporting lapses.  We advised our client to take out this lender and replace them with a new one, given the performance of the company and their acquisition success.

In the second part of this engagement, Attract Capital then raised them a $44 million facility to refinance and fund five additional acquisitions, driving revenue to $80 million and EBITDA to $14 million. We created a flexible debt structure that allowed delayed draw funding.   We were very involved in helping our client execute their M&A strategy and build their relationship with the lender. We provided valuation advice, due diligence support as well as transactional support.  We helped our client convey their capital credibility with the Sellers.   Over the course of this three-year period, we also advised the owner on a variety of areas including financial reporting and acquisition integration.

Over this 3-year period, the client has grown from $2.3 million in EBITDA to $14 million, an increase of six times.  The Company’s equity value has increased from $10 million to $145 million, an increase of 14.5 times.  This equates to a 3-year ROI of 240% per annum.  

Through our advice and financing solutions, the client has become a market leader in its industry as one of the largest and most valuable residential HVAC platforms, not owned by a private equity firm.

In the third part of this engagement, we recently negotiated a $75 million expansion of the debt facility with the lender.   The client is projected to increase EBITDA to $30 million over the next 12 months leading to a projected equity terminal value of $300 million.

In total, Attract Capital raised $140 million in financing for this company over a 3.5-year period.