HVAC by Helicopter? Breaking Down the Most Niche Deal Ever
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I think saying you're the only one in the market isn't always good because that could be because there's no one else crazy enough to do what you're doing because there's other people that can do it differently. Like there's just so many like niche businesses that people don't think about and it's it's one of my favorite parts of you know of being in business in general is just like you what? Oh another episode of Acquisition Anonymous. We don't have 100% of gears anymore. Give a thumbs down on just the plus industry one.

How do you feel about helicopters? Like really, how do you feel about helicopters? Well, today we have a deal that is perfect for either a six-year-old boy's dream job or a 36-year-old man or woman's dream job for their future career. And this deal involved helicopters and carrying around really heavy things tied to those helicopters. So Chelsea Wood and I dug into it, had a ton of fun. Here's the deal. Hope you like it. Stick around.

Okay, so everyone knows that one of the first levers you want to pull in an acquisition is updating their technology, updating their systems that might still be running on a spreadsheet or even on pen and paper. But tech is complicated. There's a lot of solutions out there. So choosing the right cloud platform, the right CRM, the right telephony, compliance, cybersecurity, not to mention implementing all that stuff. That's a job in itself.

And I want to tell you about this week's sponsor, which is Nick Akers and Enzo Technologies. So Nick actually knows about all this firsthand. He is a former searcher himself and bought Enzo Technologies, which is an IT firm for small businesses.

So Nick has seen the tech challenges that searchers face when acquiring businesses. He's seen them up close firsthand because he is a searcher. Now his team at Enzo regularly works with searchers on acquisitions, offers a complimentary IT audit of your target so you can make a plan for what you're going to do on day one. Nick takes a personal interest in all of their searcher clients and draws on his own experience in the search phase.

And his business, Enzo, actually dates back to 1989, even before he acquired it. So the company has deep expertise for managing the tech for hundreds and hundreds of small businesses over decades. So if this sounds like something that would be helpful to you, check out EnzoTechnologies.com, I-N-Z-O Technologies.com. Or you can just email Nick directly, Nick at EnzoTechnologies.com.

Chelsea, here's a secret, you know, since you're a starring recurring guest for the podcast, here's a secret. We just click record at 930. And if people aren't here, they're not here. And we just record the podcast.

I love it. Very efficient. Yeah. So we covered, I'm just getting over the flu. How are you doing? How are things with the business and everything? It's wonderful. Wonderful. I'm tired. I had a webinar this week and I don't know, whenever I do those, it's like all consuming for the whole week, right? With all the prepping and then all the follow-up and all that stuff. But it's Friday and I'm excited. Yeah. Well, Friday's a good day. Well, speaking of,

I know it'll shock you, but I have an interesting deal. So I'd love to talk through it. So let me pitch you this deal and then you tell me why it's horrible. But I think it might be awesome. So here it is. I was going to say, no, I want to buy it right now. Helicopters are always a yes. Okay. So it is from Synergy Business Brokers and it is a helicopter installation business that includes helicopters. So basically this business is like every 14-year-old boy's dream. Right. Yeah.

And it's in Missouri, so I could go buy it. So we're going to do that after this call, Michael. You and I are going to go buy a helicopter business because only cool kids own helicopters. Missouri. Fascinating. I didn't see that part. Okay. Okay. Okay. All right. So here, let me tell you about it. Okay. So it's listed for $13.9 million for sale. The annual revenue is $6.6 million, and they claim the business cash flows $3 million a year.

So the company specializes in the installation of heavy equipment, such as HVAC systems on commercial groups via heavy lift helicopters. So, so, okay. So these guys, like if I want to install like an HVAC system on a roof, like I hire these guys and gals to come fly it, fly the HVAC system to the roof of my building. Yeah. Wow. That's going to be the coolest listing I've ever seen. Yeah.

You had me at hello. I was excited about helicopters, but tying it to commercial work and yeah, I'm really excited. Keep going. Don't tempt me with a good time. Okay. After many successful years in the industry, the owners have decided to retire. The price includes the helicopters valued at $3 million and inventory and parts for those helicopters valued at $1.5 million. That shows you how janky helicopters are.

The real estate hangar is also being offered for sale for an extra $2.1 million of market value, and the company has a management team in place, and the owners operate the company as an S-corp. So I think a big flag there that the owners are definitely owner-operators of this business historically. Yeah.

If you're an S Corp. Yeah. So growth and expansion opportunity. This business has a couple of avenues for growth, such as expanding into a new geographic locations and offering new services, which require large heavy lift helicopters. The helicopters valued at $3 million are included in the sale and the inventory parts are also included. All right.

Man, this listing doesn't say much, but it says the amount of furniture, fixtures, and equipment in helicopters three different times. Well, they want it very clear. Okay, but in their defense, Michael, how many times have you seen a company where they're trying to sell the assets that are required to deliver on the revenue separately? Yeah.

Yeah. So I kind of like that. They're like, that's not us. Like we know that in order for you to buy this revenue, we have to give you the thing that produces said revenue. And so I kind of like it. I don't mind that they've said it three times. I, I agree that you guys understand what you're doing. Synergy business brokers. That's a smart move, including it. Business broker is such a hard job. It is. I have sympathy for those guys. Okay. It claims to be lender pre-qualified. Okay.

I'll channel my ender Heather and be like, what? The owner is selling because they want to retire and they will stay on for a reasonable amount of time to ensure a smooth transition. Competition. There's virtually no competition in this niche market and they have room for growth. So, yeah. So, okay. So let's just make sure we understand the fundamentals. These guys are in Missouri.

We think they're probably, do we think you're either in St. Louis or Kansas City? Is that kind of where you're going to be located if you're one of these? I mean, in theory, you could be in Jeff City too, I guess, but yeah. And so if I own a business like this, right? And so the business is- Although they're helicopters, Michael. So like technically speaking, do they have to be located in a hotspot or? So I think this is a semi-local business, meaning that-

You are most competitive when you sign up for jobs that are geographically relatively close to you because you don't have to fly the helicopter three or four hours to get there. And I would be willing to bet that their number one expense as a company after helicopter maintenance is helicopter fuel when they fly these things, kind of like any other airline type deal.

So I think businesses like this tend to be semi-geographical, which means like, let's say you're in St. Louis area, you are most competitive there. You can beat anybody on price because of cost structure if they're flying in from Chicago or wherever. And you're going to be semi-competitive in Kansas City and you're going to have no competitive advantage competing with somebody in Boston for a Boston job. Yep. So, okay. So I'm in one of these cities and...

People pay me to haul, to go lift these heavy things on top of buildings. Now, like, is that happening just when the thing's built? Like the building's built? Or does it happen when they're like replacing HVAC systems? Or like, how often is this happening, do we think? I would assume, and I used to work for, I started M&A in healthcare. And I know when they replace, this would probably be how it was, how our HVAC systems were replaced at our hospitals because they were on the roof.

And so my guess is it would be replacement and new installation. Yeah.

So what do you like about this business? I like that it's niche. Yeah. Right. I like that it's niche. It feels like there's a reasonable barrier of entry. Right. I have to say, I actually really like that they're including, and I'm biased because there was a listing with a flight school where the flight equipment, the air equipment,

vehicles will say, so I'm not disclosing too much, was not included in the sale. I'm like, what? How do you do that? And so I'm a little biased because I remember how absurd that was, that they're including the actual assets in the sale. I like that it's tied to commercial. I think there's a lot of potential, but it depends on the market, right? So like, I'm trying to decide if I would like this business as much for St. Louis as I would for like Kansas City, right? Like, because...

I don't know Kansas City... Like, at what point... How big of the buildings is it required for a helicopter to come lift versus, like, a crane, right? Like, as I try to think through the practical nature, like, who's...

While there might not be helicopters that come and do this, like cranes and oftentimes are used for lifting this stuff up. And so what is the business case for a crane versus a helicopter? What environments require a helicopter? Because some of like our downtown area would be a little challenging to get a crane in. So I could see why a helicopter would be helpful. Yeah.

I guess I'm just trying to figure out the use case. Like, when does somebody need a helicopter? What's the cost comparison to other ways of getting the equipment on the roof? Yeah. Like hospitals, can they use the freight elevators? Right? Because we fit multiple patients side by side in that. So anyway, I don't know. I'd have to understand what...

I think saying they're the only one. Okay. So this is my random musings, but I think saying you're the only one in the market isn't always good. Right. Because that could be, because there's no one else crazy enough to do what you're doing. Cause there's other people that can do it differently. They're making good money though. And they have good margins. And so it's like,

There's obviously a business. I would just need to understand. It's one of those industries I've literally never thought about. I've never thought about having to hire a helicopter to go lift something heavy for you. You know, I went to a luncheon at our bank the other day.

And one of the things they had us do when you go to a luncheon like that is everybody sits around in this big giant table. There's like 30 people and everybody, you know, there's half the people are from the bank and then the other half of the people are CEOs of just random companies. And like, there were a few people that were like, yeah, I'm a trucking company. Like I truck stuff from, from Laredo up into the United States. And we do refrigeration. And then there's some other people that you're just like, you do what? Like,

One guy was a hard money lender for home builders. So subscale home builders, when they're building a home, nobody will fund these things. So these guys basically just do hard money lending for that construction. And they underwrite it real quickly. They understand how to do it. They understand who all the brokers are or all the builders are. And they clip coupons at 10% or 12% interest. Just like, oh, that's your job.

So anyway, your, your point about like, there's just so many random niche businesses. And I say, this is a guy who owns a fireworks company. Like there's just so many like niche businesses that people don't think about. And it's, it's one of my favorite parts of, you know, of being in business in general. It's just like, I agree. That's why I like consulting. It's like every business I would talk to, I'm like, Oh, that's cool. Or my favorite thing. If once you're in business and I think once you're kind of, especially in our fields, right, where we're looking at a lot of businesses, I,

I'll be driving around and I'm like, oh, I wonder what their margins are. Like, I wonder what their business model is. And it's always entertaining. Yeah. Well, speaking of margins, this deal, they're doing $3 million a year in cashflow on 6.6 million in revenue. So,

That's what, 45% free cash flow from this business? That's high. It's lovely, but it makes sense, right? But I guess the big question I have in this scenario, because in order to perform this, it's a highly skilled workforce typically. And so who's flying the helicopters? Is it them or their son or-

Like, you know, where's that? Where do they fit into this business model? Yeah. Is that, I mean, what are my, what do we think are my moats if I have this business? Like how does somebody not compete with me? So obviously there's some big capital requirements. Correct. And background, right? Like it's not super easy to become a helicopter pilot. So I'd say capital. So there's, yeah, there's the capital required to have the stuff. There's most likely you're buying,

connections with the contractors. You probably know all the people that do high-rise HVAC in the cities where you operate. Well, and they use HVAC as an example, but I'm trying to think of other examples. HVAC is what they've provided, which this is why I don't like people doing parentheticals. Because as soon as you see them, your brain can't move past what's in the parentheses. But it's like, what else are they installing? What other heavy equipment would be

being installed. Because I'm trying to think through what the expansion, because it said you could do expansion to other, it's like, okay, well, in order to expand in other regions, you would likely need to buy more helicopters, right? And so what are other ways you can expand in a way that isn't so capital intensive? And it's like, HVAC's fine, but what else is there? Hold on, let me ask ChatGPT. Thank you, ChatGPT. What type of heavy things are you required? Oh, it's making me log in.

Sam Altman, what are you doing to me, bro? How dare you? I was trying to get me a good coach. Disrupt our podcast. Let me Google that while you think about our next point on this. But I'm curious, what sort of things do you need a helicopter to install on top of buildings? Huge cooling units. That's what I was thinking, cooling units.

Helicopters are used to install heavier, bulky items on rooftops like HVAC units, building maintenance systems, or even helipads, especially in urban areas where ground access is limited or difficult. Yeah, we had helipads installed. The...

Oh, it says they actually in urban environments, helicopters can deliver large construction materials like steel beams to rooftops or other hard to reach areas. That's what I was envisioning is like that. And I was also wondering about solar panels because solar panels are really heavy. And I know like in urban areas, they're going more sustainability kind of focused. And so is that possible that they could be used for for that as well?

Again, I'm thinking about market though. It's in Missouri, right? And you're talking Kansas City or St. Louis. St. Louis doesn't have, like how tall of a building are we talking about, right? Like it's required. And is it a size issue or is it a space issue? Because St. Louis doesn't have massively tall buildings necessarily. I mean, we have a few, but it's crowded, right? Downtown, because there's buildings everywhere. And so I keep trying to figure out the crane situation, right? Like does that basically prohibit the use of cranes everywhere?

and then make using a helicopter a better, safer function? And what's the cost of using a helicopter versus using a crane?

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And we're proud to call Walker and Chelsea, the lab's director, longtime friends of the podcast. They're passionate about helping entrepreneurs like you take the next big step. So don't wait to make your business ownership dream a reality. Visit acquisitionlab.com today to learn more and schedule your free consultation. And when you do, be sure to tell them the Acquisitions Anonymous podcast sent you. 100%. Yeah, and I have to imagine there are, when a new building is being built, a crane makes an appearance.

Correct. But when this is like a replacement unit or bringing in a new HVAC, in which a lot of these old buildings are getting pretty old, it would have to make more sense if you're at the top of a 25-story building to fly it in there as opposed to installing a whole crane. And I don't think any of the portable mobile cranes can get up that high. Why?

Well, and that's what I was just, I'm like picturing the math of it. Right. And like, it's like the angles required, the space required to actually get something up to that height. Like when I lived in Chicago, like I could see this being really helpful in those markets. Cause like those are huge, tall buildings side-by-side block after block. And so the likelihood of having the spin,

for a crane to be able to get to the top floor of a building. So I could see this building

being more practical there. So this is, I pulled this up because I Googled the stuff around cranes. Cause I was curious what the other companies look like. And it does look like these are semi-regional businesses. So this one is not the company in the subject company. Cause we don't do that anymore because people got mad because we would dox the companies. So this one's not Missouri, but they basically have two companies.

facilities, one in the Atlanta suburbs and one in also more Atlanta suburbs. So these guys generally focus on the Atlanta market with these two different facilities they have. Well, and the school that we had in the lab that was being evaluated also did utility work, which I see this one does. And so...

I think it's interesting. They would do a utility surveillance, like I guess where they would go check certain things are working, um, as kind of a second line of revenue. And so I don't know. I mean, I like the business because I do like when it's something is niche. Um, however, and I like that they have the maintenance equipment and the, I didn't say the real estate is sold separately. Real estate is sold separately with our deal.

For another 2 million. Correct. Okay. So I like that. So where are we on multiple? So we're at like a four and a half. 2.8 into 13.9 million. So it is that we may be, we may be figuring out why this deal has not transacted. It is five X. Five X. Okay. So I think that.

But with earnings like this, I mean, I understand it, right? Especially with margins like this and with the helicopters being included. But I think I'm trying to go through the math in my head to figure out if the...

The value of the real estate, I guess I'm just trying to figure out the deal dynamics, right? Like if you were to buy this, there is a capital. These are heavy capital intensive types of businesses because of the maintenance required on the equipment.

But they're including at least, you know, one and a half million. I just have some technical questions right around how they're handling the real estate because now, if it's being offered for sale. I mean, so what is it okay so they're doing helicopters, 3 million which is fine whatever.

Uh, inventory and parts being included. So 1.5, so that drops it down to 12.4. And so that's drops the multiple down, um, in my head. I still think it's reasonable to be honest for, uh, something with that margins and that level of cashflow. I would like to know if it's contracted work, like do they have contracts with these companies to do this kind of work? Yep. Cause that would also indicate a higher value lever, which would explain a higher multiple. Um, I would really like to know, uh,

how recent the management team has been in place and how often like, are the owners out of it now? Like they've literally put a management team in place and they don't do the operations anymore or are they still doing something? Um, I would like to know how many, how many pilots there are on staff or if they're contractors. Um, I do like the deal though. I mean, I like any deal that allows me to buy helicopters. Yeah.

We had a member that was able to buy a vintage Porsche as a marketing expense because it served the company he bought and he was able to use it for marketing. Yeah. And I think that's the coolest move ever. And so like this, I feel like if I can buy a helicopter, I'm probably doing, I'm pretty happy. Yeah.

So is this, what would make this not or a good fit for one of y'all's members? Oh, I think that the person that buys this company and it would not be me. I'm not a good fit for this company. Just my hopes and dreams are a good fit. But I think that in order to do this, you probably need to have strong connections to the community, like a really heavy connection to the, so you can, cause that's really what this is, right? Like you're going to need,

My guess is the owners are heavily connected to the market. And so you're going to want to make sure that you also have ways to, you know, attract and convert clients. I think if you had a background in, and we actually have a decent amount of members that are pilots, not as often helicopter pilots, but sometimes I don't think that's required, but it would be beneficial to you to have some experience in

in this space. I don't know yet because I feel like I have too many questions about how the company operates to understand exactly what the fit would need to look like. But I do think that having strong connections to and a really strong network of business owners that will be able to use your services

would be helpful here because it's so niche right like this isn't just something that you're going to be able to cold call and sell my guess is this business is heavily reliant on relationships

That's something that I would find out in due diligence or probably hopefully in this, in the CIM, they have something in there. So last question, should I own this business as if I'm not a helicopter nerd? Cause I guarantee like the, the way we read that website from the Atlanta version of this business was the owners there are flying those, those helicopters. And I bet you these guys got started because the owners of this started flying helicopter services for people like,

Should I do this if I'm not a helicopter nerd? I don't mind it as long as there's a reason why you should be the one buying it. Right. Cause I don't think you have to be a helicopter nerd to buy it. Like I honestly, me and my background would not be a horrible fit because I have connections to this space. Like my grandpa owned an airport, a local airport. And so I'm not,

I'm not a good buyer because frankly, I'm afraid of heights and I wouldn't even go in a helicopter. I think it's cool to own one, but you won't find me like in a helicopter ever in my life, probably unless I'm being rescued. And so, but my connections would probably help me. Right. And so I don't think you actually have to be a pilot. You just need to have a good plan for how you plan on staffing it. Right.

I think that I would probably be the worst person because you should be willing to fly in your helicopters that you buy. But I think it's really more important that you understand how you're going to support the function of the business. And if that means you fly the helicopters yourself, cool, but I don't think it's necessary. But again, it depends. I'd have to understand. I need more details.

to really be able to answer that intelligently. Yep. So, okay. So what do we think in total? What's your opinion? You thumbs up or thumbs down on this? I'm thumbs up on this for now, based on the minimal information I have. Sure. Yeah. I think if you believe that construction and the economy is going to keep, the world will keep spinning, like there's going to continue to be demand for this. Like there's no...

And that's, it's not even tied to new because that was my first hesitation in this market right St. Louis isn't a growing market, they're not like, there's not a lot of building happening here. Right. Kansas City I think is a little bit more where they're developing and I mean that being said they are developing a lot of St. Louis a lot of the older areas there, they're trying to upscale them.

And so there could be some work there, but I think it just depends on the market. But I like the business. I love the margins. I like that it's got a barrier of entry. I like that they're including some things in there to help, but it is capital intensive, right? So it's a business you have to be prepared to understand how the cash flow works, right? I was just having this conversation with somebody yesterday that everyone's all worried about buying businesses and like, how do...

Like, what if I do it wrong? Like the worst part of buying a business is post-close and you not understanding cashflow management. Like that's why these deals sometimes go south is because people don't know how to manage the money. And so this business could have heavy CapEx expenses. And so you would just need to make sure that you understand how to actually operate and manage a P&L. Yeah. Well, you're running basically an airline. Right. An airline for HVAC units. So it's no joke. Logistics though, like somebody with a logistics background. Yeah.

would be a good fit. Actually, okay, I'm taking my answer back, Michael. My answer, so we have quite a few veterans in the lab and a couple that have flown helicopters. They should buy it. A veteran that would be a great fit that has flown helicopters like a medic because they're going to have a strong logistics background just from being in the military. So yeah, if you're a listing lab member that has that background, come move to Missouri and buy this business. I will support you.

That's great. Yeah, I think for the right buyer, I don't hate this. So cool. That was a good one. All right. Well, we'll shut her down here. Thanks, everybody, for listening this week. And we'll see you next time. Chelsea, thanks for being here. Would you come back and do another episode? Always. I'm a deal nerd. Thank you.