It’s been a record setting summer here in Tucson. The blazing temperatures affect our daily activities and sometimes our moods, but they are a welcome inconvenience to the growing number of HVAC companies in Southern Arizona. When triple digit temperatures arrive and linger, Tucson’s HVAC companies are off and running.
In fact, our fair city has been compared to a modern day gold rush for entrepreneurs and, more importantly, investment capital corporations. In the past few years, some of the most well known HVAC companies in Arizona have commanded and taken 7, 8, even 9 digit acquisition offers. Begging the question, “is your “Local” HVAC Company, truly a Local HVAC Company?”
Let’s examine this recent trend.
The Changing HVAC Industry in Tucson
Tucson, Arizona, renowned for its unique desert climate, has seen a surge in the HVAC industry over the past decade. Our city’s extreme temperatures, particularly during summer, make a dependable HVAC system essential. As our population has continued its steady growth over the past 70 years, the number of active households grows with it. Therefore, the need for Air Conditioning Contractors has swelled to match the demand.
Investment Capital Firms, like the Wrench Group, have taken notice of this explosive growth and along with it the annual revenue generated by these companies. Investment Firms can acquire an emerging HVAC Company, trim the fat, increase prices, and then reap the profits.
Here are a few recent large-scale transactions in the Arizona HVAC industry:
The Wrench Group’s Expansion
The Wrench Group, based out of Sarasota, FL, acquisition of Parker and Sons underscores the HVAC industry’s value in Arizona.
Investment in Goettl Home Services by Cortec Group
Goettl Home Services was recently acquired by funds affiliated with the Cortec Group, based out of New York City. This acquisition, a part of the $2.1 billion Cortec Fund VII, showcases the HVAC industry’s potential in the Southwest, including Tucson.
The Any Hour Group Acquires Strongbuilt Plumbing, Air, Solar & Electric
The Any Hour Group, based out of Orem, UT, continues its acquisition of Arizona based HVAC Companies by acquiring Strongbuilt Plumbing, Air, Solar & Electric.
What It Means to Small & Medium Sized Locally Owned HVAC Companies
Investment Capital Firms and the HVAC Companies they buy have the deep pockets to push the small to medium-sized local HVAC companies off the first page of Google. This renders the smaller companies nearly powerless in the web search market (Google, Bing, Yahoo!) where almost 60% of HVAC leads are generated.
Less effective marketing platforms can be used to generate HVAC Leads, but are also heavily utilized by these corporately owned companies. Those platforms include:
Social Media: Platforms like Facebook, Instagram, and Twitter can be sources of leads, especially if the company is active and engages with its audience.
Traditional Advertising: This includes TV, radio, print ads, and direct mail.
Other Digital Channels: Email marketing, online directories, and streaming ads
The industry’s explosive growth has been further highlighted by the recent acquisition of Parker and Sons, a home services provider in Arizona since 1974, by the Wrench Group for an impressive $200,000,000. A truly mind-blowing indication of why local HVAC companies are positioning themselves to be attractive to these large investment capital firms.
So, Why Does it Matter?
So, why is it so important to choose a Local HVAC Company when in need for HVAC services in Tucson? Great question. There is little doubt that the companies being bought up by the investment firms have proven to be sustainable, profitable businesses. Therefore, they must be doing something right, right? It may not be a question of if they are good, but a question of, “are they still good?”
There are certain things that happen during mergers and acquisitions. The list is extensive, so we will briefly touch on those actions that are relevant to this situation and how they affect our local community.
Redundancy
In this setting, redundancy refers to overlapping functions, jobs, or resources in both the acquiring and acquired companies. After an acquisition, it’s common to have duplicate roles, departments, or even entire business processes that serve the same purpose. By identifying and eliminating these overlaps, the combined company can realize savings and improve efficiency.
Typically, redundancy reductions happen at the acquired company and not the acquiring company. This means jobs are lost in Tucson and we all know the effects that employment rates have on the local economy, real estate markets, and on, and on down the line.
Integration of New Strategies
Anytime that a company is under new management, there are inevitable changes in direction. Perhaps the former owner was hyper-focused on customer service and quality guarantees. The new ownership may be focused on reducing expenses to show profitability. In this case customer service and quality will initially suffer. Meanwhile, the local customer is unaware of any management changes and believes they will get the same service they always have, only to be sadly disappointed.
In any case, acquisitions and mergers bring with them changes within staffing, services, and strategies that, in the end, affect the local consumer. Integration of new ideas and changing job responsibilities can adversely affect the staff and how company operations proceed.
Why it Matters to Tucson
Keeping Your Money Local
When you choose a local HVAC company, you choose Tucson. Keeping your money in our local economy may seem insignificant when mulling over small daily purchases, but even those add up to a staggering amount. When larger purchases are made, the benefits are even greater.
Local Tucson HVAC companies that service our community with great quality and integrity typically thrive and grow. With that growth comes increased job opportunities to our friends and neighbors.
Consider an HVAC Technician. Works hard and is promoted to manager. He uses his increased salary to purchase a new home. The real estate agent selling the home benefits and buys a new car from a salesman in the Auto Mall. That salesman decides he can afford a landscaper twice a month now.
The landscaper invests in tree trimming equipment to expand his business. It trickles all the way down to the most minimal level. Not to mention, the HVAC Technician that is being promoted needs to hire a new HVAC Tech to take his place. The majority of new income in that scenario stays and circulates in our economy.
Ultimately helping our local economy to flourish.
A Commitment to the Tucson Community
Selecting a Local HVAC Company goes beyond merely supporting our local economy. It’s also about a commitment to the community.
Local HVAC Companies are invested in Tucson’s well-being, actively participating in community events and fostering a sense of belonging. Getting involved in local charities has long been a concern of long-standing Tucson businesses.
You can typically find a list of local business partners on the websites of most of our local community service organizations and charitable foundations. In these lists you can almost always find the majority of actual locally owned businesses.
This involvement enriches our communities through educational programs, beautification projects, and a helping hand for the less fortunate, among a number of other outreach programs.
What are the Advantages of Choosing a Local HVAC Company?
Personalized Service: With deep community roots, a Local HVAC Company often prioritizes customer satisfaction, emphasizing long-term relationships and offering tailored solutions.
Expertise and Knowledge: These companies possess a wealth of region-specific knowledge, understanding Tucson’s weather patterns, and offering valuable insights into energy-efficient systems suitable for the locale.
Quick Response Time: Local HVAC companies, with their streamlined operations, can provide swift responses during emergencies.
Although some corporately owned HVAC companies can still provide quality service, oftentimes the 520 number you call is actually redirecting out of the city and even out of the state and region. Making it difficult to get a true sense of the local pulse at the time of your emergency.
The Highest Rated Truly Local Tucson HVAC Companies
Takeaways
As the surge in “Locally Owned” Arizona HVAC companies receiving acquisition offers increases, ranging into multi-million-dollar deals, the question is, “whether these “local” HVAC companies remain truly local after being acquired by larger investment capital firms.”
Undeniably, there are many reasons the answer is an emphatic “NO”. Let’s summarize what we have discussed here.
Key Points:
Growth of the HVAC Industry in Tucson: Tucson’s unique desert climate and growing population have caused a rise in demand for HVAC services. Large investment firms, such as the Wrench Group, have taken note of the profit potential and are acquiring emerging HVAC businesses to streamline and capitalize on this growth.
Impact on Small & Medium Sized HVAC Companies: Large firms with significant resources dominate online search engine rankings, making it challenging for smaller local HVAC companies to compete. Despite using various marketing channels like social media, traditional advertising, and other digital channels, these smaller companies still face significant challenges.
Why Choosing a Local Company Matters: Acquisitions can result in redundancy, which may lead to local job losses. Additionally, changes in company strategies post-acquisition might negatively impact service quality, potentially disappointing local consumers.
Benefits to Tucson for Choosing Local Companies:
Economic Growth: Spending with a Local HVAC Company ensures money stays within Tucson, benefiting the local economy through a ripple effect.
Community Commitment: Local firms are more deeply rooted in the community, participating actively in local events, charities, and outreach programs.
Advantages of Opting for a Local HVAC Company:
Offers personalized service rooted in community values.
Provides expertise specific to Tucson’s climatic conditions.
Ensures quicker response times during emergencies.
In conclusion, while larger corporately-owned HVAC firms might still deliver decent services, there’s an undeniable value in supporting local companies that are more in tune with Tucson’s needs and community spirit.
For these reasons and many more, it is something to be considered the next time your AC is on the fritz.
