Confidential Information Memorandum

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

TABLE OF CONTENTS

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

• Executive Summary ........................ 1
• Business Overview ........................ 2
• Products & Services ...................... 3
• Market Analysis .......................... 4
• Operations Overview ...................... 5
• Locations & Facilities ................... 6
• Team Overview ............................ 6
• Customer Profile ......................... 7
• Financial Highlights ..................... 8
• Strategic Differentiators ............... 9
• Why This Listing ........................ 10

━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━

CONFIDENTIALITY NOTICE: This document contains confidential and proprietary information regarding Desert Sun HVAC ("the Company"). Distribution is strictly limited to qualified prospective acquirers under executed NDA. Reproduction or redistribution is prohibited.

Prepared by ClearValue Advisory · bizvaluefree.com

Date: May 2026

#### 1. Executive Summary

The Company is a 22-year-old residential and light-commercial HVAC contractor headquartered in Nevada, presented to the market by its founder in connection with retirement. Trailing-12-month revenue is $2,400,000 [VERIFIED — owner-reported] with weighted seller's discretionary earnings of $500,268 [CALCULATED], representing a 22.47% three-year revenue CAGR [CALCULATED] driven by a contract-anchored residential service base of approximately 1,800 active accounts and 24 light-commercial customers.

The Company offers a qualified acquirer a rare combination of scale, recurring revenue density, and operational maturity in a Sun Belt HVAC market. Sixty percent of revenue is contracted maintenance work [VERIFIED], producing the predictability that strategic acquirers and SBA lenders prize. The asking price is $1,625,869 [CALCULATED], equating to 3.25x weighted SDE — within HVAC market norms and supportable under SBA 7(a) financing with a projected 2.13x DSCR [CALCULATED].

#### 2. Business Overview

History. The Company was founded in 2004 [CALCULATED — derived from 22 years operating as of 2026] and has operated continuously under current ownership for the full 22-year period. The business has built [INSUFFICIENT DATA — broker to confirm specific milestone history, expansions, brand recognition awards].

Ownership structure. Single-owner private company. Legal entity type [INSUFFICIENT DATA].

Geographic footprint. Single location, Nevada [VERIFIED].

Mission and operating ethos. [INSUFFICIENT DATA — broker to capture from owner for buyer-facing narrative]. As a placeholder, the Company's revenue mix (60% contracted maintenance, 40% project work) and 24-hour emergency service offering indicate a service-quality and customer-retention orientation typical of premium residential HVAC operators. Industry benchmark — not specific to this Company; broker to verify against current comp data.

Missing: Founding story, key milestones, awards/certifications, brand-recognition data, mission statement — Impact: CIM Business Overview reads thin on narrative; sophisticated buyers expect a story. Broker action: collect founding-story interview, certifications (NATE, EPA 608 universal), and any local market awards.

#### 3. Products & Services

The Company operates two primary revenue lines:

Maintenance & Service Contracts (60% of revenue, ~$1,440,000 [CALCULATED]). Recurring agreements covering scheduled tune-ups, priority emergency response, and discounted repairs. This line provides the Company's revenue predictability and is the cornerstone of valuation. Specific contract terms, pricing tiers, and average annual revenue per account [INSUFFICIENT DATA].

Project Work — Installation & Replacement (40% of revenue, ~$960,000 [CALCULATED]). New residential and light-commercial system installations and replacement work. This line carries higher per-job margin but lower predictability. Mix between residential and commercial within project work [INSUFFICIENT DATA]. Mix between new construction and retrofit/replacement [INSUFFICIENT DATA — though industry data indicates retrofit/replacement constitutes 62.5% of the U.S. HVAC equipment market].

Service hours. Weekday 7:00 AM – 6:00 PM, Saturday 8:00 AM – 2:00 PM, plus 24-hour emergency line [VERIFIED]. The 24-hour offering is a competitive moat in the residential service segment.

Margin profile by service line. [INSUFFICIENT DATA]. Broker action: request P&L by service line for last 12 months from owner's accounting system.

#### 4. Market Analysis

Industry size and growth. The U.S. HVAC systems market stood at $31.7 billion in 2025; the global market is projected to grow at a 7.0% CAGR from 2026 to 2033, reaching $445.73 billion by 2033 [VERIFIED — public market data]. Repairs grew from 21.6% of HVAC revenue in 2021 to 31.3% in 2025 [VERIFIED — public market data], a tailwind for service-and-maintenance-anchored operators like the Company.

Geographic considerations — Nevada. The Company operates in a high-cooling-demand market with significant residential growth. U.S. population grew by 1.8 million in 2025, with adults ages 61-79 dominating home-buying activity and first-time buyers comprising 32% of recent purchases in early 2026 [VERIFIED — public market data]. Sun Belt markets continue to absorb a disproportionate share of housing growth, supporting sustained HVAC service demand.

Competitive landscape. [INSUFFICIENT DATA — top 2-3 named competitors not captured at intake]. Broker action: ask owner to identify top 3 direct competitors and the Company's specific positioning vs. each.

Industry M&A climate. HVAC small-business M&A is in an active consolidation cycle. PE-backed roll-ups, strategic regional consolidators, and franchise platforms are all active acquirers. Median small-business HVAC SDE multiples sit at 2.7x with premium contract-anchored businesses transacting at 4-6x SDE; top performers reach 7x+ [VERIFIED — public transaction data]. Industry benchmark — not specific to this Company; broker to verify against current comp data.

#### 5. Operations Overview

The Company operates a 12-person team (10 full-time, 2 part-time) [VERIFIED] under direct ownership oversight. The owner reports a 55-hour weekly commitment [VERIFIED] across estimating, customer relationships, technical decisions, and general administration.

Workflow. [INSUFFICIENT DATA — full operational workflow narrative to be developed with owner]. Standard HVAC contractor workflow includes inbound call-handling, dispatch, on-site service or installation, post-job billing, and contract renewal cycles.

Technology stack. [INSUFFICIENT DATA — broker to capture FSM, accounting, CRM, marketing tools]. See AI Integration Roadmap (Deliverable 2) for opportunity assessment.

Vendor relationships. [INSUFFICIENT DATA — primary equipment manufacturer relationships, distributor terms, parts vendors not captured].

Process maturity assessment. Installation SOPs are documented [VERIFIED]; customer-service playbook is in progress [VERIFIED]; six other identified SOPs are unconfirmed (see Strategic Gap Analysis, Section 3). The Company is at a moderate process-maturity level — sufficient for current operations under the founder, with documented gaps that a buyer should expect to close in the first 6-12 months post-close.

Missing: FSM platform, accounting software, full vendor list, written workflow narrative — Impact: Operations Overview is thinner than typical CIM standard. Broker action: complete the operations-and-tech-stack intake fields.

#### 6. Locations & Facilities

Missing: Address, own-or-lease, monthly rent, lease expiry, renewal options, square footage, real-estate-with-sale flag — Impact: CIM Locations & Facilities table is incomplete; serious buyers will not advance to LOI without this. Broker action: capture full lease/ownership detail per the standard intake, including whether real estate transfers with the sale (and at what price) if owner-occupied.

#### 7. Team Overview

Missing: Per-role detail for the 12 non-owner employees — names (or anonymized titles), tenure, comp range, family-member status, retention likelihood — Impact: Team Overview is one of the most-scrutinized CIM sections; thin detail signals weak data collection. Broker action: complete the structured Employee Roster intake for the top 5 roles at minimum.

#### 8. Customer Profile

Active accounts. Approximately 1,800 residential plus 24 light-commercial accounts [VERIFIED], representing a deeply diversified base across the Company's service area.

Concentration metrics. Largest single customer: 18% of revenue. Top-5 combined: 32% [VERIFIED]. Top-10 combined: [INSUFFICIENT DATA]. The largest-customer figure stays below the 20% threshold that triggers SBA-lender concentration scrutiny.

Revenue mix and quality. 60% recurring maintenance contracts; 40% project work [VERIFIED]. The recurring share is materially above the HVAC industry norm, providing the kind of cash-flow predictability that supports premium multiples and SBA financing. Industry benchmark — not specific to this Company; broker to verify against current comp data.

Customer acquisition channels. [INSUFFICIENT DATA — broker to capture: referral %, repeat %, paid digital %, organic search %]. Broker action: complete marketing-channel breakdown.

Contract structure. [INSUFFICIENT DATA — written multi-year vs. annual auto-renew vs. handshake]. This is a critical data point for buyers. Broker action: confirm with owner.

#### 9. Financial Highlights

3-year revenue CAGR: 22.47% [CALCULATED]. Weighted SDE: $500,268 [CALCULATED] (using 1× / 2× / 3× weighting on 2023/2024/2025).

Missing: 2026 YTD revenue and net profit, explicit 2023 and 2024 net profit (vs. pro-rated) — Impact: Financial Highlights table relies on pro-rated earlier-year profit and lacks current-year run-rate visibility, both of which sophisticated buyers will request. Broker action: pull 2023 and 2024 tax-return Schedule C / Form 1120-S net income, and current-year YTD P&L through the most recent month-end.

SDE bridge (most recent year, 2025):

$380,000 net profit + $95,000 owner W-2 + $7,268 employer payroll tax + $22,000 health insurance + $14,400 vehicle + $32,000 depreciation + $12,600 one-time (Section 179 service-truck purchase) = $563,268 [CALCULATED].

#### 10. Strategic Differentiators

• 22-year operating history — long-tenured operating record materially above industry median.
• 60% recurring maintenance contract revenue — the structural feature that most distinguishes premium HVAC operators in the SDE 4-6x band from one-off-install operators in the 2-4x band [VERIFIED — public transaction data].
• 1,800-account residential density — route economics that strategic acquirers value for cross-sell, technician utilization, and incremental contract revenue.
• 24-hour emergency service — service-tier moat against discount competitors.
• Below-threshold customer concentration — 18% largest, 32% top-5 — supports SBA financing at standard terms.

#### 11. Why This Listing

The Company offers a qualified acquirer scale, recurring revenue density, and a 22-year operating record in a growing Sun Belt HVAC market — a profile that is increasingly difficult to source as the consolidation cycle accelerates. With a 60% contract-anchored revenue base, sub-20% customer concentration, and demonstrable revenue growth, the business is structurally attractive to strategic regional consolidators, PE-backed platform/add-on acquirers, and qualified owner-operators alike. The owner's 12-month timeline and 90-day post-close transition provide a workable handoff window for a prepared buyer.

---