CHOOSING THE RIGHT PARTNER
You’ve built your business by earning the trust and respect of customers and employees. Now, as you contemplate the next step in evolving your company, you face one of the most important decisions of your business career. How do you choose the right partner? Owners who have joined the Reedy family of companies tell us that there are three things that guided their decision. They found in Reedy: (1) a company that they could trust to preserve their legacy; (2) a management team with the resources and expertise to help scale their business; and (3) a business model that would help secure the future for themselves and their employees.
THE BENEFITS OF PARTNERING WITH US
Preserve Your Legacy
We only acquire companies with a proven record of success. Instead of forcing changes via corporate mandate, we invest the resources needed to preserve your legacy and maintain the trust you have earned with employees and customers.
Scale your Business
We invest the resources needed to accelerate growth and customer success. From recruiting, training, and financial management to sales, marketing, and technology, we offer proven programs for scaling your business.
Secure Your Future
Unlike potential partners who have a short-term financial interest, Reedy Industries and our investment partners have a long-term strategy for building, growing, and sustaining profitable business operations that consistently exceed customer expectations.
MEET OUR OWNER-OPERATORS
Rick Tullis and Stefan LeRow are passionate about the HVAC/mechanical contracting business they founded in 2005. Based in Waco, TX, Capstone Mechanical has distinguished itself…MORE >
Jerry Szydlowski founded Pro-Tek Mechanical with his partner Tom McGuckinin in 2001. Jerry says, “Over the years, we developed a reputation for solving weird problems other contractors couldn’t address. MORE >
Kumar Ramaiya and his partner Harry McGregor acquired Macon, Georgia-based Hamlin Air Conditioning and Sheet Metal in 1990. Introduced through a mutual acquaintance, the two men… MORE >
Bill Mitchell has been president of Arctic Engineer since 2000. The company, founded by Bill’s father, began serving the NW Indiana and metro Chicago markets in 1958. MORE >
Steve Schuldt has been instrumental in the success of Tessendorf Mechanical Services since 1975, serving as a co-owner with Doc Tessendorf for 28 years before becoming the sole owner and manager in 2005. MORE >
Rich Parlier founded First Point Mechanical in 2007. The company is known throughout Chicagoland for their high-quality service, maintenance, installation, repair, and replacement of HVAC and mechanical equipment. MORE >
Rick Tullis and Stefan LeRow are passionate about the HVAC/mechanical contracting business they founded in 2005. Based in Waco, TX, Capstone Mechanical has distinguished itself from day one by delivering responsive, innovative solutions that have earned the company market-leading customer satisfaction ratings. Capstone specializes in MEP engineering, mechanical installation, sheet metal fabrication, maintenance, building automation, and service work on building systems.
“It has been an incredibly rewarding journey,” says Rick. “Stefan and I were fortunate enough to team up with two local investors who believed in us and provided the resources we needed to turn our dreams into reality.” Over the next 16 years, the company grew faster and had a greater impact than the founders could imagine.
A few years ago, Rick began to explore different business exit plans for himself and his partners. He and Stefan contemplated the options, including an internal sale, an external sale, or some form of hybrid deal. They attended mergers and acquisitions (M&A) conferences to learn more about deal structures, valuations, and the due diligence process. The two partners were particularly interested in creating an opportunity for key people to earn a stake in the business moving forward.
Toward the end of 2020, Capstone crossed a threshold for growth and began receiving solicitations from private equity firms. Rick and Stefan started short-listing potential partners. The company’s financial systems and history of operational transparency eliminated the need for extensive prework in the discussions with potential suitors. Before long, Capstone received an inquiry from Reedy Industries.
“At that point, we were still in exploratory mode,” says Rick. “But Joe Kirmser and CJ Folden made a strong first impression. They understood our business and were really interested in expanding into the Texas market.”
Capstone provided Reedy with the information requested, and within a few weeks, Reedy shared an evaluation that came in right where Rick and Stefan were hoping based on what they learned at the M&A conferences. There was just one snag on the Capstone side of the deal. With 4 equal partners, the Capstone team realized they had more work to do in growing the company before realizing a desirable exit point for everyone. Rick says they told Joe and CJ they were not fishing for a better deal. Instead of putting their discussions on hold, the Reedy team offered to develop a counteroffer that would be more aligned with Capstone partner’s longer-term objectives.
Rick reports that there were five goals they wanted to achieve:
1. Ensure that key people have a stake in the future of the company
2. Preserve the values and culture that helped make Capstone successful
3. Gain access to resources for expanding in Texas
4. Contribute to and benefit from the success of the parent company
5. Make sure the original investors were rewarded equitably
The early self-education that Rick and Stefan underwent paid off in evaluating the reconfigured offer from Reedy. They developed a spreadsheet for comparing internal and external paths to exit that enabled them to do side-by-side comparisons. “Life is a matter of choosing between options,” Rick says. “When we plugged in the numbers, it became clear. The Reedy offer beat anything we could hope to do internally.”
Capstone became part of Reedy Industries in July 2021. In the press release announcing the acquisition, Stefan LeRow commented, “It’s comforting to know that our team members and customers will be able to take advantage of a larger platform for growth and more resources without sacrificing the culture and teamwork that has made us who we are. Reedy has a proven history of acquiring businesses and adding value in key areas while preserving the customs and uniqueness of the original acquired business.”
Jerry Szydlowski founded Pro-Tek Mechanical with his partner Tom McGuckinin in 2001. Jerry says, “Over the years, we developed a reputation for solving weird problems other contractors couldn’t address. Somehow, we had the tenacity and knowledge base to not only solve current issues, but we were able to foresee unintended consequences for corrective actions and future projects.”
When asked to provide an example of Pro-Tek’s problem-solving acumen, Jerry recalled the installation of a 100% outside air unit with a remote refrigeration condenser and hot gas bypass capacity control that was designed and installed incorrectly. Jerry says, “The installing contractor kept losing compressors and having all kinds of issues. We came in and quickly figured out that it was piped wrong. The costs of compressor replacement and downtime for the facility were huge. We solved the problem years ago and are still working with that customer today.”
Pro-Tek Mechanical is a full-service commercial, industrial, and pharmaceutical mechanical contractor. What sets Pro-Tek apart, Jerry says, is their comprehensive approach to problem-solving. “We always use a team approach, partnering with customers and vendors to develop a comprehensive plan with cost-effective solutions. Customers depend on us for project planning, design assistance, system troubleshooting, repairs, and installation. It’s not only HVAC, but we work on all types of mechanical systems, particularly in pharmaceutical plants, plastic injection molding, and die cast facilities.
While specialization created clear differentiation for Pro-Tek, it also presented a challenge. Recruiting, training, and retaining technicians with the skills needed to handle complex mechanical problems is very difficult. And Jerry found himself spending more and more time in the field to keep up with customer demand. A few years earlier, Jerry had initial discussions about an acquisition with Reedy Industries. But the timing wasn’t right. In late 2020, facing mounting challenges in finding qualified talent, the retirement of his partner, and difficulty in meeting customer demand during scheduled plant shutdowns, Jerry re-entered discussions with Reedy’s CEO, Joe Kirmser, and CJ Folden, VP of mergers and acquisitions.
In March 2021, Pro-Tek joined the Reedy family of companies. “Joe and CJ quickly earned my trust and the trust of our employees. They are straight shooters who understand our business and what makes us unique. They offered us immediate access to the talent we needed to keep up with customer demand, and provided the sales, administrative, and back-office support that enabled me to do what I enjoy doing most—managing teams to solve complex problems. In retrospect, my only regret is not partnering with Reedy sooner.”
Kumar Ramaiya, PE
Hamlin Air Conditioning and Sheet Metal
Kumar Ramaiya and his partner Harry McGregor acquired Macon, Georgia-based Hamlin Air Conditioning and Sheet Metal in 1990. Introduced through a mutual acquaintance, the two men possessed complementary personalities and skillsets. Kumar’s engineering expertise in design-build and business practices and Harry’s experience in sheet metal installation and field operations were a perfect fit. Staring out with just 5 employees, the partners’ shared goal of creating an employee-centric, service-driven culture established a strong foundation for the company’s future success.
Today, Hamlin has become one of central Georgia’s leading HVAC system and service contractors with over 80 employees supporting military (DoD), commercial, and industrial customers. The company specializes in HVAC design, mechanical installation, sheet metal fabrication, DDC systems, maintenance, and service work on building systems. Hamlin’s industry-leading team offers in-house fabrication, welding, and construction of custom HVAC systems. The company’s sheet metal shop is equipped with advanced machinery and tools, and its service department has earned long-standing loyalty from clients by helping them reduce maintenance costs, maintain comfort, process conditions, extend equipment life, and protect capital investments.
Kumar reports that he and Harry began thinking about becoming part of a larger organization in 2018 for three reasons:
1. Retirement: The partners wanted to identify a path to retirement that would enable a secure future for their employees.
2. Talent: With more technicians approaching retirement age and fewer people entering the field, keeping up with customer demands was becoming increasingly difficult.
3. Continuity: Hamlin grew so fast over the years that maintaining this growth would require access to the resources of a larger company.
They started out talking to private equity firms, but soon realized that the ideal partner would have a history of success in the HVAC mechanical services business. Initial contact with Reedy Industries was facilitated through a broker. However, the broker relationship didn’t pan out. That’s when Kumar and Harry informed Reedy that they had decided to sell the company to their employees. “Joe Kirmser and CJ Folden were very understanding, but they suggested we continue our dialog. In April 2021, they visited us for the second time,” says Kumar. Together they visited several customer sites and talked through the partners’ goals for transition, staying late into the evening. Unlike the broker, who pressured the partners to make a quick decision, the Reedy team encouraged Kumar and Harry to take their time to make sure they made the right choice for themselves and their employees.
Within a few days, Reedy presented a very fair offer, which included absorbing the broker’s costs and fees. Equally important, Kumar and Harry would remain with the company for two years and Hamlin would be able to continue operating independently with access to additional resources and incentives for employees to stay on. While it was understood that there’s no quick fix to the industry-wide shortage of skilled technicians, the opportunity to partner with other Reedy companies in neighboring states created the chance for Hamlin to sell jobs that sister companies would install.
In July 2021, Hamlin became part of the Reedy Industries family of companies. Summarizing the benefits of the partnership, Kumar says, “Both Reedy and Hamlin share a proud, decades-long heritage of putting employees and customers first. Reedy’s respect for our culture, our customer relationships, and the values that have made us successful have made for an ideal partnership. And their resources and expertise for accelerating our growth in the region will provide important opportunities for current and future employees and customers.”
Hamlin is the first company to join forces with Reedy that primarily serves military customers. This expertise, and the opportunity to share it with other owner-operators throughout the country, will help Reedy access a new market segment and further diversify revenue streams in the future.
Bill Mitchell has been president of Arctic Engineer since 2000. The company, founded by Bill’s father, began serving the NW Indiana and metro Chicago markets in 1958. From day one, Arctic focused on employee engagement, relentless customer satisfaction, and innovative solutions.
In 1968, years before the popularity of co-generation projects, Arctic designed and installed a “total energy system” for a seven-story motor hotel in the Chicago area. Since then, Arctic has conducted hundreds of energy audits and installed energy-efficient retrofit systems for many satisfied customers including schools, hospitals, and complex manufacturing facilities. In 2003, the company became employee-owned by adopting an employee stock ownership plan (ESOP). This model enabled employees to have a vested interest in the success of the company.
In 2019, with $30 million in annual revenues, Arctic entered into discussions with Reedy Industries. The company’s revenue mix—70% from construction and 30% from service—was a good fit. According to Bill, “The most important factor for us, being employee-owned, was finding the right cultural fit. We are a close-knit organization with many key people who are critical to our success. The idea of ‘selling out’ to a large organization that didn’t respect our heritage was not an option.”
Bill says that Joe Kirmser, Reedy’s CEO, played a vital role in leading the discussions that resulted in Arctic’s decision to become part of the Reedy organization in July 2020. “Joe took the time to understand our business, our culture, and our employee concerns. He is an experienced leader who has delivered on every promise from day one.”
While the transaction was technically somewhat complicated by the ESOP, Bill says that joining Reedy was a great move for management, employees, and customers. “In an acquisition, everyone’s worst fear is that they’ll have people breathing down their backs trying to force changes. Instead, our partners at Reedy have provided consistently intelligent support to help us grow the business, particularly with regard to our service department.”
Joe Kirmser says, “The fact that both of our companies showed performance and got this deal done during the COVID-19 crisis is truly amazing. It is a testament to the synergy between our organizational philosophies. Bill Mitchell echoes these sentiments. He says, “It really comes down to caring about your people and treating them with the respect they deserve. When you create a culture that puts people first, they consistently exceed customer expectations. The deeply-held beliefs have been baked into Reedy’s culture for nearly a century, and that’s why our relationship has been so successful.”
Steve Schuldt has been instrumental in the success of Tessendorf Mechanical Services since 1975, serving as a co-owner with Doc Tessendorf for 28 years before becoming the sole owner and manager in 2005.
For over 60 years, Tessendorf has built its company and reputation by providing quality workmanship and service, guided by integrity. Each of Tessendorf’s technicians has more than 20 years of experience in troubleshooting, servicing, and replacing complex mechanical systems.
Steve says, “When we took over the business in 2005, we had four employees and a freelance estimator. I was doing a fair amount of the field service work and we grew the business by focusing on two things: (1) We treat people the way we wanted to be treated and (2) we treat customers’ facilities as if they were our own. These continue to be our guiding principles today. If you get those two things right, success follows.”
Tessendorf is located in Gilberts, IL, 45 miles northwest of Chicago. Nearly 75% of the company’s work is in the manufacturing sector, with the balance comprised mostly of commercial real estate and municipal customers. By following its founding principles, Tessendorf has grown steadily and profitably every year. Steve says, “If you looked at our books in 2007 and 2008, you’d see that the Great Recession didn’t even make a dent.”
When the COVID-19 crisis hit, Steve and his wife Deb, who manages the business side of the operation, decided to begin thinking about selling the business. In late 2020, they met Joe Kirmser, Reedy’s CEO. Deb says, “We were impressed right away with Joe, who is a person of very high moral integrity. Having spent that last 45 years of our lives building this business, finding a partner we could trust was critical.”
Steve and Deb knew what the business was worth because they had conducted an independent assessment, which was validated by their banker. Steve says, “Joe wasted no time in presenting a fair offer. But the financial terms were only part of what led to our decision to join Reedy. Joe also understood the value of our business in human terms. He knew how important our reputation is with employees and customers.” With little advance notice, Steve and Deb invited Joe to their annual Christmas party, not really expecting him to make it. Not only did he show, but he also ended up talking to every employee and their spouses. By the end of the evening, many of the concerns about transitioning to new ownership were laid to rest.
In summing up the experience, Steve says “”We chose to partner with Reedy because it is a well-run company that shares our culture and passion to provide honest work and quality service to our valued customers. We’re excited that Reedy’s larger platform, additional resources, and extensive building services will enable us to expand the capabilities we can provide.”
First Point Mechanical
Rich Parlier founded First Point Mechanical in 2007. The company is known throughout Chicagoland for their high-quality service, maintenance, installation, repair, and replacement of HVAC and mechanical equipment.
Rich’s strategy for building and differentiating First Point has been to focus on attracting the best people and to invest heavily in training, safety, and technology. This has resulted in highly efficient and safe operations as well as innovative service solutions. First Point provides customizable preventive maintenance solutions and offers maintenance service via full coverage contract or on a time-and-material basis.
Over the years, Rich received frequent calls from suitors interested in buying First Point. One call came from a friend who sold his company to a large, publicly traded facilities services company. Rich agreed to meet with the company, but made it clear that he wasn’t interested in selling. After that meeting, Rich says, “While I knew this wasn’t the right fit, I came away realizing that we didn’t have an exit strategy and would definitely need one.”
Eventually, the rigors and stress of managing a large and growing service company began to take a toll on Rich. “We reached a size where I was getting out of my comfort zone. The financial, personnel, and operational decisions were making it difficult to get a good night’s sleep.” That’s when Rich connected on LinkedIn with Bill Reedy of Reedy Industries. While they had never met before, Rich held Reedy Industries in high regard as a result of their success over many decades in the greater Chicago market.
At their first meeting, Bill explained Reedy’s strategy for acquiring successful HVAC service providers. In stark contrast with what he could expect selling to the publicly traded facilities service company, Rich learned that Reedy offered a platform of support that would help ease the burden of day-to-day management while enabling First Point to grow, take on larger jobs, and preserve the culture and autonomy that made First Point successful.
First Point joined the Reedy family of companies in 2019. Commenting on the acquisition, Bill Reedy said, “First Point is everything we’re looking for in an acquisition. They’re helping us add density, services, accounts, and scale. There’s no loss of continuity because Rich and the management team will continue to lead First Point as a standalone platform. They can focus on their work, and we can focus on supporting them.”
Looking back on his decision, Rich couldn’t be happier. He says, “We gained the financial resources to take on any size job, and access to the highly skilled labor pool needed to meet and exceed customer expectations. Joining Reedy has been great for our employees because of cultural synergies and increased opportunity for career advancement.”
OUR INVESTMENT CRITERIA
Annual revenues from $10M to $100M
Industrial and commercial HVAC services including:
- Building Controls
Excellent reputation in serving customers in the following sectors:
- Industrial and Manufacturing
- Health Care and Senior Living
- School Districts and Education
- Commercial Real Estate
- Municipal and Government
- Strong management team
- Experienced, loyal workforce of HVAC technicians
- Dedicated sales, dispatch, and customer service team
Successful HVAC service providers serving one or more major metropolitan regions throughout the US.
Consistent year-over-year track record of revenue growth and profitable operations.