Episode 58: Path to the True American Home Service Company Dream

Hailing from Ireland, Alan O’Neil has had a career of growth, learning, and expertise in the world of M&A. He’s also gathered a wealth of experience in what it takes to grow a service company, and what leadership needs to look like for lasting operational success. In addition to being the founder and CEO of Abacus Plumbing, Air Conditioning & Electrical—one of the most reputable home service companies in Texas—Alan is also the Regional CEO for The Wrench Group Texas. His story, as Alan puts it, is one of “if I can do it, anyone can”, and he sees himself as an ordinary man who put in the hard work and loves changing lives for the better.

The Story of Abacus

Alan got his start in America working at Gerald Plumbing, which was under the umbrella of what would eventually become Nexstar. This was his foundation for learning best practices in the home service industry. The owner sold the company, and Alan started Abacus Plumbing, Air Conditioning & Electrical with the owner in 2003, serving Houston proper to this day. They started as 50/50 partners, and when the old owner decided to retire, Alan bought the second half of the company and continued on as sole owner of the business.

Under Alan’s leadership, Abacus grew over a million dollars each year just from plumbing services starting with the opening year and just narrowly missing the million-dollar growth mark in 2011. This gathered the interest of different private equity groups, one of which approached him in 2011 about selling. Alan didn’t have selling on his mind, and after entertaining the interest, quickly realized the people who had approached weren’t a good fit for himself and the core values of Abacus. In 2012, Alan’s feelings towards M&A changed when Collin Hathaway approached Alan about a potential partnership. Collin and Alan hit it off right away, as they shared the same values and placed importance on the same aspects of life and business. They closed the deal in just a few short weeks, and the rest, as they say, is history. Today, Abacus is at 55 million in sales, and offers a full range of services including plumbing, HVAC, and electrical.

Things to Consider About M&A

M&A went bonkers in 2020 with no signs of slowing down in 2021, but it has to be a great fit culturally for you and your company. Alan views himself as the one who steers but his employees are making the money. If you don’t have a happy workforce, it’s simply not going to work well. You also have to understand that you’re going to make the transition from being an entrepreneur to having someone else to answer to. That doesn’t mean you have to give up all control, though! Alan’s main concerns with Abacus were taking care of his people and being able to retain his entrepreneurial spirit. Collin and The Wrench Group were the right fit to allow him to accomplish those things. He’s still making his own decisions and still feels like an entrepreneur almost a decade later.

If you’re like Alan was in 2011, you might be keeping your head down, just focused on hitting your yearly goals and keeping the engine churning. What really changed for Alan was having a routine estate planning meeting with his wife, when his planner asked him what would happen to Abacus should anything happen to him. His wife and kids didn’t want to take over, and it left Alan thinking about his legacy and what he had built. Taking some chips off the table and adding a partner protected his family and his legacy, and he was able to structure a deal that left him enough skin in the game to stay invested.

Operational Growing Pains

After partnering with The Wrench Group in 2012, Collin told Alan “look, you’re really good at plumbing. We have a company in Dallas that is really good at air conditioning, and not so good at plumbing.” They wanted to pair Alan and that company together so Alan could help them with the plumbing, and so Alan could learn air conditioning. Alan assumed it would be easy to learn air conditioning, as how different could HVAC and plumbing be? As it turns out, HVAC techs and plumbers aren’t anything alike.

Air conditioning seemed way more difficult to Alan. The average ticket was bigger, you’re bringing big equipment through the house, and they weren’t as operationally fine-tuned as they were on the plumbing side. Abacus had plumbers that were there from the start, great with customers, and good at their jobs, but a lot of the techs were newer. It was very trial and error the first couple of years with HVAC. Alan was so eager to grow it, they weren’t being as judicious with their hiring process as they should have been. Alan even considered closing down the HVAC department because he was so worried about it damaging their reputation. Collin told him to take a deep breath, and they tackled each problem one by one, changing some things operationally as needed.

When they started, the main thing was Alan didn’t nail down his operational plan. They just checked the boxes. They hired a manager that knew HVAC, hired some techs, bought the trucks, partnered a manufacturer, and went to work. Without an operational plan, they were just flying by the seat of their pants. Multiple services shouldn’t mean multiple strategies. If you have a process and operational plan for a service that is working and you’re adding additional services, you should be repeating that same success strategy instead of just checking off the boxes you think you’re supposed to.

Hiring Outside the Industry for Leadership?

Alan credits the PE world for challenging him to find better leadership for his team. When he was on his own and needed a supervisor or manager, he’d usually just look at his competitors and figure out who he could convince to switch sides. A lot of times, this just ended up bringing his competitor’s problems into his own business. What the private equity world taught Alan is to broaden his search horizons for talent, and look nationally instead of locally as well as consider talent outside of the industry to find the best leadership and management possible. For example, Alan’s GM has a background in oil and gas. She has no background in the home service industry. His VP, Tony, came from the moving business, and before that was in the uniform business. His HVAC Operations Manager has a pest control background. None of these key leaders came from the industry, but they are great business leaders who knew how to run a business profitably. A great thing about it, too, is that they challenge the status quo and the norms of the home services industry.

Alan currently oversees three companies, $130 million in sales, and almost 1,000 employees. He credits a lot of his success to being surrounded by great leadership, and works hard to change the lives of his employees for the better. If you have any questions for Alan, he’s happy to help. You can reach Alan by emailing him your questions about M&A, private equity, operations, and anything else in his wheelhouse!