Sam Turner·August 31, 2022

Building an HVAC Holdco to £60m in Revenue

Sam Turner, a 44-year-old British CFO/FD who spent his corporate career at multi-billion-euro travel companies (including living in Spain, Singapore, and Switzerland), left after growing disillusioned with corporate politics and constant travel away from his young family. After a period of reflection and taking UK-based acquisition training courses (Harbour Club, Carl Allen, Jonathan Jay), he and four European partners formed Advantas Equity Partners and he set out to build an HVAC holdco in the UK. His first acquisition in December 2021 was a £5m-revenue, £350k-EBITDA heating and plumbing contractor for new-build residential developments, purchased at 3x EBITDA with ~20% equity, ~33% seller note, and ~47% cashflow loan from an alternative UK lender. By the time of recording he had closed or was about to close two more HVAC businesses, bringing the combined group to ~£15m revenue and ~£1.4–1.5m EBITDA. His five-year plan targets £60m revenue, ~£6m EBITDA, and a ~5.7x exit generating £20m in personal proceeds—with the multiple arbitrage thesis grounded in risk reduction through diversification rather than full integration. The episode is notable for its detailed discussion of UK acquisition financing (no SBA, shorter terms, higher costs), the challenges of fixed-price new-build contracts under inflation, and Sam's philosophy of leaving acquired businesses operationally independent while installing lightweight governance (EOS) and developing promoted-from-within general managers.

Deal facts

purchase price: ~£1.05m (3x £350k EBITDA for first deal; similar for two others; combined ~£4.5m for three)
multiple: 3x EBITDA (per deal, approximate)
sde ebitda: First business: ~£350k EBITDA; combined three businesses: ~£1.4–1.5m EBITDA
revenue: First business: ~£5m revenue; combined three businesses: ~£15m revenue
financing structure: ~20% equity (own + co-investor capital), ~33% seller note (deferred over 3 years in equal annual installments), ~47% cashflow loan from alternative UK lender (1-year interest-only, then amortized over 4 years)
notes: No SBA equivalent in UK. Lender pre-approved a credit facility roughly double the first deal's size, anticipating the buy-and-build. Third deal was pending close at time of recording. Target: £60m revenue, ~£6m EBITDA (10% margin), exit at ~5.7x to generate ~£20m net proceeds for Sam. Five-year plan targeting 2026 exit. Five co-investors via Advantas Equity Partners (loose partnership of five European searchers).

Why this business

Sam wanted a large, fragmented, recession-resistant industry with strong macro tailwinds—specifically the energy-efficiency and decarbonisation agenda pushing heating/cooling system upgrades. He wanted to avoid tech businesses that could be disrupted overnight, and saw a natural multiple arbitrage opportunity in the long tail of ~38,000 UK HVAC businesses trading at low multiples. He also found that HVAC owners were typically engineers who had plateaued operationally, leaving room for a finance-and-strategy-minded operator to add value.

What's working

Multiple arbitrage from consolidating small HVAC businesses: buying at ~3x EBITDA individually, targeting a group exit at ~5.7x as risk reduces and institutional buyer demand increases
No-integration holdco model: each business retains its identity, brand and management, reducing disruption and preserving culture while still allowing cross-selling and knowledge transfer
Macro tailwind: UK government mandating no new gas boilers in new homes from 2025 and likely retrofit incentives for existing homes, expanding the addressable market
Promoting internal number-twos to MD roles rather than installing outside managers, preserving institutional knowledge and team morale
Lender relationship that pre-approved a credit facility for the buy-and-build strategy, not just deal-by-deal
Advantas Equity Partners co-investor network providing reciprocal deal flow, capital, and a non-executive director on the board
EOS (Entrepreneurial Operating System) being implemented as a shared operating framework across portfolio companies

What's hard

UK lending market is far more restrictive than the US (no SBA equivalent): shorter loan terms, higher interest rates, lower leverage, making deals harder to finance especially sub-£400k EBITDA
First business had fixed-price contracts with large developers; inflation drove up materials costs sharply, squeezing margins below target and requiring urgent renegotiation
Lender changed funds mid-process for the second and third deals, causing significant delays and uncertainty
Identifying and vetting the number-two who will step up as MD is very difficult: in the first acquisition the conversation with the number-two happened only two weeks before close
Managing the transition of promoted MDs from junior to senior roles requires intentional coaching and support that is easy to underestimate
Blue-collar culture gap: white-collar buyers must be humble, suppress the urge to immediately 'fix' things, and earn credibility on the ground before making changes
Searching was initially scattergun across sectors before settling on HVAC, adding time

Notable quotes

I wanted to build a group of companies but not just for the sake of the financial implications of doing that — more because I wanted to create a platform for small businesses to prosper and to be actually stronger as being part of that platform.

There is a natural arbitrage because of that long tail in terms of the pyramid — there is a natural multiple arbitrage opportunity by just putting companies together, not even together but as part of the same group, because multiples increase as risk reduces.

I see people coming in fresh, I think they know everything, and it's like you have no effing clue how the reality works. I mean, you just don't.

Getting anything done that sub sort of four hundred thousand EBITDA is more challenging from a lender perspective — they just don't want to know.