Recession Proof Norcal Absentee Owned Environmental Testing Company - SC2199

• $4,950,000 Asking Price
• $750,000 Cash Flow
• $8,000,000 Gross Revenue
• $4,950,000 Down Payment
• $350,000 Adjusted EBITDA

This Northern Californian Absentee Owned Environmental Testing Company is a California Sub-Chapter S Corporation that was founded 16 years ago and has been under founding ownership ever since. Structured currently as an absentee owned enterprise, this company specializes in Field Compliance verifications, home performance rebates, energy assessments and permit pulling services with the goal of providing quality in-home inspection services. They are one of the leading providers for the Home Energy Rating System (HERS) program in California. Why is this business Recession Proof? HERS testing is mandatory for all newly constructed buildings and is prescriptively required for most Heating Ventilation Air Conditioning (HVAC) alterations, including replacement of HVAC units. This company focuses mostly on the residential replacement market, and there are HUGE opportunities for growth in the new construction and commercial HVAC markets. They currently service Northern California but also have a presence in Southern California.

What makes this company so special? They have developed an in-house proprietary all-encompassing management platform tailored to the needs of contractors withing the residential and commercial HVAC, Plumbing, Electrical, Solar and home performance sectors. With their innovative suite of features, this software empowers businesses to streamline their operations, optimize workflow, and improve compliance with industry standards. This have also incorporated Artificial Intelligence into their work flow, allowing for faster more streamline operations in addition to cost cutting.

The HERS testing market is experiencing sustained growth, with over 362,000 homes rated in 2023, a 7% increase over 2022. Driven by energy codes and consumer demand for efficiency, the average HERS index score reached 57, indicating a 43% better efficiency than in 2006. Massachusetts and Arizona lead in adoption, with significant growth in Texas.

Market Growth and Trends
• Volume: Over 362,000 homes were rated in 2023, marking a decade of year-over-year increases.
• Efficiency Gains: The average HERS score of 57 in 2023 shows a steady decline from previous years, reflecting more efficient, high-performance homes.
• Key Markets: In 2023, 98% of new homes in Massachusetts were HERS rated, followed by Arizona at 73%. Texas recorded the highest total number of rated homes at 89,000.
• Housing Types: 77% of rated homes were one- or two-family dwellings, while 23% were multi-family.

Key Market Drivers
• Energy Codes: Increased adoption of stricter building energy codes necessitates verification, driving demand for raters.
• Energy Savings & Resale Value: Lower HERS scores (indicating higher efficiency) are marketed to homebuyers for long-term energy savings. Studies show that certified energy-efficient homes can command up to 8% higher sales prices for new homes and up to 30% for existing homes.
• Reduced Risk: Homes with lower HERS scores have shown 32% lower mortgage default risks, increasing interest from lenders.

Technical and Sector Trends
• HVAC Performance: More builders are using HERS rater services to grade HVAC installations to improve scores and reduce callbacks.
• Envelope Tightness: Approximately 80% of single-family HERS-rated homes have an envelope leakage rate between 2 and 5 ACH50, with 32,000 homes achieving under 2 ACH50.
• Ventilation: While exhaust-only is common, the use of energy recovery (ERV) or heat recovery (HRV) ventilators is growing.

Business Location
City: Northern California
State: California

Reason for Sale
The reason for selling is the Seller would like to pursue other interests.

Training/Support
The Seller is willing to train the new Owner for up to 4 weeks at 20 hours per week. Additional training from the Seller may be available at mutually agreed upon compensation from the Buyer to the Seller.

Market Outlook/Competition
Growth and expansion can be had by increasing their presence in Southern California to a larger geography (they have a small presence in Southern California), increasing focus on the new construction market and expand with satellite offices near major cities throughout California. There is also an opportunity to expand nationally.

Real Estate Description

They operate out of 10,000 square feet building that is owned by the Seller and can be available for purchase for an additional cost. They currently operate under a 20-year lease with a current rent of $6,900 per month. 

CA 02282967
NV B.1003039.LLC
NV BUSB.0007191