Family-owned heating, ventilation, and air conditioning companies with steady, recession-resistant incomes are a hot acquisition target for private equity firms.
The Gulf Coast in particular was a popular hunting ground. These include companies like Alpine Investors, a San Francisco-based PE company whose former subsidiary Wrench Group operated in the Tampa / Sarasota, Atlanta, Dallas, Houston and Phoenix markets, and which jointly bought HVAC companies – like Sarasota’s CoolToday for annual sales of $ 150 million. Alpine eventually sold the Wrench Group to another investment firm, Investcorp.
Alpine is now back with Apex Service Partners, a newly formed Tampa-based company led by President and CEO AJ Brown, 32, and CFO Will Matson, 30. Apex is again backed by Alpine and has $ 100 million in funding that can be purchased independently from its own HVAC and household services businesses.
“Our goal,” says Brown, “is to work with the best brands in the best communities and help them become bigger and better versions of themselves so they can better serve their communities.”
“I’ve done the big businesses, but what I’m passionate about is building small businesses. This is how you affect people’s lives. ‘Will Matson, Apex Service Partner
Despite their youth, Brown and Matson have impressive pedigrees. Brown, who grew up in Fort Myers, worked at Goldman Sachs before becoming CFO and Head of M&A at AVITRU, an Atlanta-based construction software and services company that Roper Technologies of Lakewood Ranch acquired from Alpine in December 2018 Has. Matson, who grew up in Texas worked for JPMorganChase & Co. in New York and London.
Matson, who worked for his family’s blue collar manufacturing business prior to college, said his penchant for small, founder-owned businesses led him to Apex.
“My father wore blue jeans and work boots and I worked for him over the summer and had all the troubles of a small family business,” says Matson. “I’ve done the big businesses, but what I’m passionate about is building small businesses. This is how you affect people’s lives. “
Brown agrees, calling small businesses “the lifeblood of the economy.”
For Brown, Matson, and the entire Apex team, the success of their business begins with a national strategy. In addition to Florida, the company has already acquired HVAC and household services companies in Texas, Louisiana, and Mississippi. The most recent acquisition is St. Louis-based Academy Air.
To date, Apex has acquired 14 companies with gross sales of approximately $ 200 million. (Brown and Matson prefer to use the term “partner” rather than “acquire” when discussing business.)
“We’ve worked with some of the best small and medium-sized businesses in the business,” says Matson. “But we want to give them resources that they have never had before. It’s like a racing driver who has never had a pit crew. You’ve never got anyone into professional finance, accounting, professional recruiting, professional business intelligence, and marketing. So it’s about making resources available to them while keeping them extremely local. ”
In other words, rebranding is not the apex way. The company is largely straightforward in its approach, allowing HVAC companies to maintain their carefully honed identity and reputation.
“We have 20 different brands,” says Matson. “We have one of the oldest brands in New Orleans, one of the oldest brands in Naples, Orlando, and we want to continue to strengthen them as local institutions.”
An early step in building a comprehensive, unified business development platform was the hiring of Steve McCarty, who assumed the role of Chief People Officer at Apex. McCarty, a longtime manager at Enterprise Holdings, the parent company of Enterprise Rent-A-Car, helped set up Enterprise’s renowned training and management program.
“He wanted to take the same framework and apply it to the craft because it works so well in a rental car [sector]This is, in a way, a similar industry, ”says Brown. “It’s worker; They wash cars; It’s about sales. ”
Courtesy. Academy Air in St. Louis is now part of Apex Service Partners’ portfolio of HVAC companies.
Winning a rock star like McCarty as one of its first employees is an indication of how Apex intends to nurture deep, lasting, and mutually beneficial relationships with the businesses it has acquired, rather than just flipping them over for a quick buck. Three of the companies Apex acquired have already had gross annual sales up from $ 15 million to $ 50 million, and their experiences have been summarized in tactics and strategies shared with other Apex partners aiming to make similar leaps.
“When each of our partners grow, they run the biggest company they’ve ever run,” says Brown, “because they’re growing month by month every month. So we offer them talents and best practices to share, shared insights that will help them not be the lid that stifles the growth of their business. ”
This mindset speaks volumes for Apex’s approach to mergers and acquisitions. The company itself, Matson and Brown explain, is not a private equity firm. Yes, it’s backed by the deep pockets of Alpine investors, but he and Brown view what they’re doing as long-term, growth-oriented business development with the intent to buy and hold. The strategy is similar to that of Clockwork Home Services in Sarasota in the 1990s and 2000s, when a network of home service companies was built under multiple brands. Toronto-based Direct Energy bought Clockwork in July 2010 for $ 183 million.
“Private equity gets a bad rap,” says Brown. “Quick flip, quick flip, quick flip – there are private equity firms that do that, but our private equity investor is not keen on them. We build companies to last. “
Brown adds that Apex invested millions of dollars back in the HVAC businesses it acquired. “We’ve done more than 50 implementations to help modernize systems,” he says. “We spent millions of dollars building corporate infrastructure, millions of dollars on facilities and equipment. A lot of capital has been put into these companies to free them up so that they can be on the catwalk for the next 20 years. ”
“We want to build something that will be around for a very long time,” adds Matson, “a company that can endure and lead the industry.”
TO GO TO SCHOOL
Small businesses may be the lifeblood of business, but people are the lifeblood of small businesses, and therein lies a major challenge Apex must overcome in order to expand its involvement in HVAC and household services.
“I don’t think it’s an imminent threat, but there aren’t enough people going into trade,” says Matson. “People have options. Trying to be a preferred employer in a labor shortage market is difficult. We are really trying to separate there. ”
Apex is investing heavily in local recruiting and training initiatives, according to Matson, to fill the ranks of the companies it has bought with talented, hardworking, and entrepreneurial artisans. “We spend so much time and energy recruiting, training, developing people and really giving them a roadmap,” he says. “We say, ‘Look, you just got your GED – are you interested in going to a business school? There is a card that will take you six numbers in a couple of years. «We see this story all the time. ”
Apex’s educational efforts extend to corporate owners as well. In many cases, Matson and his team are dealing directly with a founding owner, the only person who has ever been a company’s chief executive. Through a series of conversations, Apex must figure out how best to meet the owner’s desires while preparing the company for future success.
“We want to honor and preserve the legacy of your life’s work,” he says, “and look after your employees. But some people have different desires. Some toss the keys at you and say, “I want to retire and be on the beach in 90 days.” Others say, “I’m slowing down. I want to keep working, but I want to work two days a week. ‘While others are just starting out. We have to meet many different requirements, but in the end that’s why we call ourselves Apex Service Partners. We try to serve our partners. ”
(This story has been updated to clarify that William Matson was not part of the Wrench Group prior to joining Apex Service Partners and that AJ Brown, not Matson, grew up in Fort Myers.)