HVAC Earnouts and Equity Rollovers (2026)

On a $6 million HVAC offer from an investor-backed buyer, about $3.6 million is cash at closing. The rest arrives later, if it arrives.

• Money held back runs 2 to 3 years, and is paid only if the shop hits agreed numbers.
• The stake you keep is 15% to 30% of the price, and you cannot sell it until they sell.
• You stop running the shop at closing, but you carry the risk on both.

Money Held Back Until the Agreements Hold

Part of your price is paid after closing, and only if the shop hits agreed numbers. In HVAC deals that is nearly always about the maintenance base.

• The period: 2 to 3 years with investor-backed buyers. A competitor buying you holds back less, or nothing.
• The size: 10% to 15% of the price, paid if the targets are hit.
• The measure: agreements still in force, or the profit the shop earns.

How Common This Is

Across private company sales of every kind, 24% carried money held back in 2025, up from 19% in 2014.

Investor-backed platforms are the buyers who do it. A competitor down the road usually pays 80% or more in cash and holds back little.

The Number Is Not Yours Any More

You sold the shop. You no longer set the renewal price, answer the phones, or decide which tech goes to which job. They do.

• If their changes cost you agreements, you can miss a target that was realistic the day you signed it.
• Money paid in later years falls under the IRS rules for sales where the price is not fixed at closing. Ask your accountant how the timing lands.

The Stake You Keep

Instead of taking all cash, you leave 15% to 30% of your price invested in the buyer’s parent company.

The pitch is a second payday. When they sell to the next investor, your slice sells with them.

• Your slice is small. A $6M shop inside a national platform is a fraction of one percent.
• You cannot spend it. It is locked until their next sale, on their timetable.
• It can shrink. Later fundraising dilutes you unless the paperwork stops it.
• You can lose it. Leaving on bad terms can trigger a forced buyout at a lower value.

The Tax Is Delayed, Not Cancelled

Swapping part of your shop for stock in their company is usually not taxed at the time, if it is set up correctly. You pay when you sell the stock.

Any cash you take alongside it is taxed now. That is the part sellers get wrong.

What to Ask For

• The right to sell when they sell, on the same terms.
• The right to make them buy you out after a set period.
• Quarterly numbers, so you can see what your slice is worth.
• Protection from dilution when they raise more money.

Why a $6M Offer Is Not $6M

Across all deals carrying money held back, about one dollar in five actually gets paid. Price that portion as a fraction of its headline.

• Cash at closing: $3.6 million, in your account on the day.
• Your stake: $1.68 million, which you cannot touch until they sell.
• Held back: $720,000, paid only if the targets are hit.

Buyers put a price on this long before they offer it. Comfort Systems USA, at the large commercial end of the trade, carried $44.7 million of held-back purchase money on its books at 30 June 2026.

It values that money with a probability-weighted calculation, then discounts it at a weighted-average cost of capital of 17.5%.

Smaller buyers run the same arithmetic with smaller numbers. Money you collect in three years is worth well under its face value to them, and they know that when they write the offer.

You Stop Renewing the Agreements They Measure

Every guide here tells you maintenance agreements are the biggest lever you control. They are also what the held-back money usually gets measured on.

• They set the renewal price from day one. A rise you would not have made can cost you agreements, and your target with them.
• Their office handles the renewals. You do not hear about a cancellation until it has already been counted against you.
• Agreements renew on their own cycle. A two-year measure covers renewals you were never part of.

Ask for the base to be the agreements in force on closing day. Get them counted by number and by dollar value, both written into the offer letter.

Make the Window a Full Year

Heating and cooling work is seasonal. A period running part of a year catches one season and misses the other, which moves the number without anything changing in the shop.

Ask for whole years, and for any short final period to be measured against the same months of the year before.

All of This Is Set in the Offer Letter

The structure gets fixed in the offer letter, and most owners sign it looking only at the headline number.

The buyer does this every month. You do it once.

Even non-binding terms stick. Asking to move one later gets treated as bad faith.

• Settle first: how the agreements are counted, whether partial performance pays, what happens if they sell, and how you get out of the stake.
• By the time the full agreement arrives, your leverage is gone.

Related Guides

• Investor-backed buyer or a competitor, and what HVAC shops sell for.
• Valuation by shop size, and how long a sale takes.
• The same offer letter fixes how the sale is taxed.
• Selling in Pennsylvania, New Jersey or New York.
• Reaching these buyers without paying a broker.
• These terms get negotiated quietly. Selling off market.

Frequently Asked Questions