Why Horizon partners cut a deal with private equity

Dave Geiger was a third-generation plumber, who decided at his technical high school that he wanted to run his own firm.

Mark Aitken went to the same prep school as former Vice President Joe Biden, but preferred the freedom and hourly wages of a tradesman to the college grind.

They met at a neighborhood party among the brick starter homes of Fairfax, Del., in 1996. Together, they convinced each other, they could build something bigger.

Geiger hired Aitken, and Aitken helped transform his small plumbing/heating/air-conditioning home firm. They dropped Geiger's name and called it Horizon Services, suggesting service as far as you can see.

They added an on-time-or-free guarantee, night and weekend service, training, and bright-orange trucks. They boosted cash flow until they could buy other small firms, borrowing from WSFS Bank for trucks and buildings in Mount Laurel, Norristown, and regional centers from Connecticut to Maryland.

With 645 employees, Horizon sales topped $152 million last year. “We’ve been tripling about every three years,” and it’s time to add a lot more, Geiger said Thursday, the day after Sun Capital, a Florida-based buyout firm whose bosses include 76ers co-owner Marc Leder, bought a majority stake in Wilmington-based Horizon.

The founders kept a “significant” stake in the business and will be the managing partners. “Our leadership hasn’t changed. But now we have a financial partner, Sun Capital, that can lock arms with us and grow the business,” Aitken said. “Our goal is to get to $500 million in the next 8 to 10 years.” They're negotiating deals in Virginia and Florida.

Besides improved service, the partners “wanted a business that gave our people opportunity,” he added. Of 64 managers, he counts 40 who “started with a van.”

A million Americans work in plumbing, heating and air-conditioning, in more than 90,000 firms, according to U.S. Census data. Sales total over $150 billion a year; about a third goes to payroll. The Bureau of Labor Statistics says median income for the industry topped $50,000 for the first time in 2012. “The trades in general are a great place to invest your career,” Geiger said.

“It’s gotten a lot harder to find good technicians,” added Aitken. “Fewer people have gone into the trades. Parents haven’t been choosing that as an option.”

Geiger says Horizon has been hiring more college graduates and others in their late 20s looking for steady income. “We want people who are willing to learn,” said Aitken. “You have to be willing to work hard. You have to have the flexibility to work nights and weekends.”

Horizon buys out “guys in their 50s who are tired of getting up early,” and younger owners “who don’t have time and money to invest in the technology, the training, the processes,” said Aitken.

We sat in a room full of furnaces, once an Agilent Technologies warehouse. “It’s not a showroom. It’s a training room,” said Geiger. 

What happens when Sun meets its target and cashes out?

Will Aitken and Geiger be around to pick more buyout finance firms for bigger deals, as the founders of Philadelphia’s old SpectaGard did to build AlliedUniversal, now the nation's largest private guard service?

Will they go public and buy into national markets, as Comcast did?

“We've got a lot of work before we think about that,” Geiger told me, smiling.