I'm trying to understand the financing situation behind the HVAC M&A strategy, assuming they aim for a 25% CAGR. That would mean adding around €2.4M in EBITDA by 2026 compared to 2024. The acquisitions already completed or underway — without assuming any margin improvement — contribute about €0.6M of that incremental EBITDA, so they still need to grow significantly through further M&A.
From what I see, recent acquisitions are being done closer to 4–8x EV/EBITDA, which would imply a spend of €8–16M. Assuming an OCF of €2M, they’d likely need to lever up to around 2–3x EBITDA — quite a shift from their current position.
In your post, you mentioned M&A at 3–4x EV/EBITDA, but it seems they’re now paying more. How do you view their M&A strategy at this point? Do you think margins will improve quickly, allowing them to generate more OCF and avoid putting too much pressure on the balance sheet?
If you spot any flaws in my thinking, I’d be happy to be corrected!
Thanks for the comment, Rubencio. I don’t think they’re targeting a 25% CAGR—or any specific CAGR for that matter. When I talk to them, it seems more like they’re evaluating opportunities case by case, and pulling the trigger only if the deal is attractive enough without overstretching the balance sheet.
But to touch on your points—first, I’m not sure where the 4–8× EBITDA multiples are coming from. They’ve typically done deals in the 3–4× range. The most recent one was a bit more expensive, just under 5×. That said, they don’t need to have the full amount ready upfront. These deals are usually structured with over 50% seller financing, often in the form of monthly payments deferred for more than two years on average. In the latest transaction, the structure was pushed even further out: 8 semi-annual payments, meaning a four-year schedule. This setup lets them fund a large part of the purchase with the free cash flow of the acquired business itself.
I still don’t have a firm view on what exactly to expect in terms of margins from the acquired business, aside from some unspecified improvement tied to back-office optimization and warehouse centralization. That said, I think the acquisitions make sense even if margins stay flat.
In my mind, I was assuming an average CAGR of 25%, based on the idea that they wanted to maintain a strong growth pace — but it's true that they haven’t outlined any concrete targets.
I find it hard to assign a valuation multiple to the company given how loosely defined the M&A growth is. How do you approach valuing it? Or do you just trust management and let yourself be surprised?
Regarding M&A, their FY2024 financial report mentioned that ITR/ECO was acquired at 8.09x EV/EBITDA, and Vergottini at 5.5x EV/EBITDA.
That said, I understand that the fact M&A growth is flexible and depends on circumstances — along with the delayed payment structure — helps frame things differently.
Okay, I just found that table that lists the acquisitions at the multiples you mentioned. And looks like you're right. I had thought both were done below 4–5×, so I think the difference likely comes from the pension liabilities, which weren’t disclosed at the time of acquisition. I’ll need to double-check that. That said, I don’t really mind if it’s 4.5× or 5.5× EV/EBITDA, but 8× for ITR/ECO seems way too high, and I’d be very skeptical if they ever pay anything close to that going forward.
I don’t think there’s a “right” way to value a company with as many moving parts as Lindbergh—especially now that most of the revenue will be coming from HVAC, which is non-linear, inorganic growth. But I do trust the management and think they’ve done a great job with HVAC so far, which is why I didn’t sell when it hit €4 last year. For now, I’m closely watching how they execute—what multiples they pay, the quality of the acquired businesses, integration, and financing. I wouldn’t want them acquiring at the same pace they did in 2024, but also don’t think they should slow down as much as they did in H1 2025. Once they’ve built more structure around M\&A, it’ll be easier to look at this through a DCF. But for now, I think DCF would do more harm than good—too many assumptions can shift quickly depending on deal flow, multiples paid, and core demand from in-night and waste.
What I would say is that I think this deserves a premium multiple—if not purely for the quality of the core business, then because the way they listen to customers and build around unmet demand makes future growth more likely, and that kind of growth should naturally come with high ROIC.
Considering the future prospects, I think it’s very cheap here—at least that’s where my money is. And I believe the next year will bring more clarity on how attractive this HVAC strategy really is, in the form of numbers.
The official EV/EBITDA is 8x (€4.5M of the transaction / €560K of Ebidtda).
However, the "adjusted" multiple is 4.8x — since the deal was self-financed with the ITR/ECO cash had, Lindbergh effectively paid €2.6M for €560K of EBITDA.
Apologies for not having looked into the numbers before bringing it up.
Hi David,
I'm trying to understand the financing situation behind the HVAC M&A strategy, assuming they aim for a 25% CAGR. That would mean adding around €2.4M in EBITDA by 2026 compared to 2024. The acquisitions already completed or underway — without assuming any margin improvement — contribute about €0.6M of that incremental EBITDA, so they still need to grow significantly through further M&A.
From what I see, recent acquisitions are being done closer to 4–8x EV/EBITDA, which would imply a spend of €8–16M. Assuming an OCF of €2M, they’d likely need to lever up to around 2–3x EBITDA — quite a shift from their current position.
In your post, you mentioned M&A at 3–4x EV/EBITDA, but it seems they’re now paying more. How do you view their M&A strategy at this point? Do you think margins will improve quickly, allowing them to generate more OCF and avoid putting too much pressure on the balance sheet?
If you spot any flaws in my thinking, I’d be happy to be corrected!
Thanks for the comment, Rubencio. I don’t think they’re targeting a 25% CAGR—or any specific CAGR for that matter. When I talk to them, it seems more like they’re evaluating opportunities case by case, and pulling the trigger only if the deal is attractive enough without overstretching the balance sheet.
But to touch on your points—first, I’m not sure where the 4–8× EBITDA multiples are coming from. They’ve typically done deals in the 3–4× range. The most recent one was a bit more expensive, just under 5×. That said, they don’t need to have the full amount ready upfront. These deals are usually structured with over 50% seller financing, often in the form of monthly payments deferred for more than two years on average. In the latest transaction, the structure was pushed even further out: 8 semi-annual payments, meaning a four-year schedule. This setup lets them fund a large part of the purchase with the free cash flow of the acquired business itself.
I still don’t have a firm view on what exactly to expect in terms of margins from the acquired business, aside from some unspecified improvement tied to back-office optimization and warehouse centralization. That said, I think the acquisitions make sense even if margins stay flat.
Cheers!
Thanks for your answer David.
In my mind, I was assuming an average CAGR of 25%, based on the idea that they wanted to maintain a strong growth pace — but it's true that they haven’t outlined any concrete targets.
I find it hard to assign a valuation multiple to the company given how loosely defined the M&A growth is. How do you approach valuing it? Or do you just trust management and let yourself be surprised?
Regarding M&A, their FY2024 financial report mentioned that ITR/ECO was acquired at 8.09x EV/EBITDA, and Vergottini at 5.5x EV/EBITDA.
That said, I understand that the fact M&A growth is flexible and depends on circumstances — along with the delayed payment structure — helps frame things differently.
Okay, I just found that table that lists the acquisitions at the multiples you mentioned. And looks like you're right. I had thought both were done below 4–5×, so I think the difference likely comes from the pension liabilities, which weren’t disclosed at the time of acquisition. I’ll need to double-check that. That said, I don’t really mind if it’s 4.5× or 5.5× EV/EBITDA, but 8× for ITR/ECO seems way too high, and I’d be very skeptical if they ever pay anything close to that going forward.
I don’t think there’s a “right” way to value a company with as many moving parts as Lindbergh—especially now that most of the revenue will be coming from HVAC, which is non-linear, inorganic growth. But I do trust the management and think they’ve done a great job with HVAC so far, which is why I didn’t sell when it hit €4 last year. For now, I’m closely watching how they execute—what multiples they pay, the quality of the acquired businesses, integration, and financing. I wouldn’t want them acquiring at the same pace they did in 2024, but also don’t think they should slow down as much as they did in H1 2025. Once they’ve built more structure around M\&A, it’ll be easier to look at this through a DCF. But for now, I think DCF would do more harm than good—too many assumptions can shift quickly depending on deal flow, multiples paid, and core demand from in-night and waste.
What I would say is that I think this deserves a premium multiple—if not purely for the quality of the core business, then because the way they listen to customers and build around unmet demand makes future growth more likely, and that kind of growth should naturally come with high ROIC.
Considering the future prospects, I think it’s very cheap here—at least that’s where my money is. And I believe the next year will bring more clarity on how attractive this HVAC strategy really is, in the form of numbers.
Thanks for the follow-up!
Hi David.
I double checked the transacation, I was wrong.
The official EV/EBITDA is 8x (€4.5M of the transaction / €560K of Ebidtda).
However, the "adjusted" multiple is 4.8x — since the deal was self-financed with the ITR/ECO cash had, Lindbergh effectively paid €2.6M for €560K of EBITDA.
Apologies for not having looked into the numbers before bringing it up.
Appreciate you clarifying this Rubencio. No worries man.