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Are residential hvac service companies less sophisticated in Phoenix? This contractor seems to think so. And this, he says, is the reason the consolidators have been relatively slow to set up platform companies in this plum air conditioning market.
MESA, Ariz. There's been a lot in the news lately about consolidation - from consolidators in financial trouble to consolidators scooping up more contractors.
While consolidation is on the minds of most contractors in Phoenix, the market is not as active here as in other parts of the country -- especially where residential-light commercial work is concerned.
The reason for that may be that many contractors who perform residential and light commercial work in Phoenix are on the smallish side, says Dave Probst, division president for Blue Dot Services.
He notes that there aren't many large companies in Phoenix that regularly generate sales of $10 million and up. Most are under the $3 million mark, which makes it more difficult to consolidate the area.
"Phoenix is a very fragmented residential-light commercial air conditioning market," he says. "There's not any one really big dominant company. In other markets, such as Atlanta and Cleveland, there are some really large companies. In Phoenix we don't have that - it's not available to that market."
Probst states that without a large platform company, consolidators will have to acquire smaller companies and group them together -- which is what Blue Dot Services is in the process of doing here.
The platform company for Blue Dot is ECI Air Conditioning & Heating in Mesa, Ariz., which it acquired in August 1998. Probst, who founded ECI in 1985, says he had sales in the area of $3.5 million before the acquisition.
Two more companies are currently being merged with ECI under the Blue Dot banner, which will bring total sales to about $6 million annually.
THREE BECOME ONE
ECI performs only residential-light commercial work - no low-temperature refrigeration. And Probst likes it that way.
"We do about 60% residential and 40% commercial, with very little new construction. We like the service, maintenance, and replacement business."
Probst hasn't seen a...