growth option, while businesses over $ 2 million of EBITDA may pursue either path. Larger fuel distribution and HVAC businesses are far more likely to successfully attract equity via recapitalization.
Private capital providers active in this space, including industry-specialized firms, Small Business Investment Companies( SBICs), and family offices tend to be patient investors who rely on the existing management team to continue running the business post-transaction. For the largest companies, traditional private equity may be an effective fit. These capital providers are actively seeking companies like yours: mature industries marked by stable recurring income, non-cyclical service demand and assets ripe for efficiency upgrades so that the business can scale quickly. Diversified fuel distribution, HVAC and other home services businesses check every one of these boxes.
WHAT TO EXPECT FROM A CAPITAL PARTNER
If you are considering pursuing a recapitalization, keep in mind that your capital partner will expect clean, timely reporting following the transaction. Beyond that, different capital partners have different oversight expectations when it comes to safeguarding their investment. While some firms want board representation, others prefer an observational role and will want to weigh in on major decisions such as an acquisition or adding significant new debt. The size of their investment is often a key factor in these requests. It is important to shop around and speak with multiple potential partners before committing to ensure that their operating style is a fit for how you run your business.
FUEL YOUR NEXT MOVE
It wasn’ t that long ago that the only options for many delivered fuels businesses were to sell to a competitor or to hand the keys to the next generation when the time came for a transition. Fortunately, the expanding array of private capital solutions and the competition among traditional banks for new lending relationships now permeates the lower middle market and has increased optionality for business leaders in our industry. There are more tools than ever to execute a bold acquisition, bring in a partner to accelerate growth or structure an ownership transition.
The capital is out there for those willing to go get it. This is a meaningful advantage for owners willing to take action. So, what will you do to fund your growth this year? l FON
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