Written on: August 1, 2026 by Jeffrey Simpson
For an industry rich with multi-generational family businesses, passing the keys to the next generation remains one of the most common—and most complicated—transitions an owner will ever navigate. Over my decades of serving the fuels and HVAC industry in both operational and financial roles, I’ve had the privilege of working with many great family-run businesses. Even best-in-class companies find this transfer tricky because there are so many potential variables.
Owners must identify how best to “season” the next-generation leader by providing the right levels of exposure across operations, finance and strategic thinking. The incoming leader must be competent—or have the potential to grow into the role—to achieve success. Perhaps most importantly, they must also carry the right attitude. After all, a college degree or years of on-the-job experience do not guarantee that a child is truly ready to shoulder the long hours, the periods of profound stress and the complex interpersonal demands of running a business. These can be complicating factors in the most straight-forward of situations. Many businesses are forced to deal with other transitional challenges—children who pursue another career before returning to the family fold, successors thrust into leadership earlier than anticipated by a parent’s illness or death, or businesses carrying financial strain that makes the timing of any transition less than ideal. There is rarely a clean hand-off.
The Uncomfortable Truth
The credibility of the next-gen leader is earned through a sense of shared sacrifice and experience in the trenches. Young leaders who have dealt with the operational challenges of both brutally cold Winters and painfully warm ones, suffered through commodity price shocks and maneuvered through a tough banking environment earn the kind of trust that titles cannot confer. It’s the kind of credibility that can only be built up over decades, not years. It’s often also the baseline qualification a new leader needs to convince an experienced team to execute on ambitious new initiatives after a longtime leader steps away.
However, there is an opportunity here that next-gen leaders too often miss. Showing up and working hard speaks volumes, but demonstrating from the outset that they bring something new and transformative to the table is critical. The greatest impact will be made when next-gen leaders exhibit that they are fully invested in the business and not simply along for the ride as the recipient of an inevitable, passed baton. They are positioned to successfully combine real-world experience and command of the latest tools. This is powerful stuff.
When combined with a strong understanding of the financial and capital tools that can springboard a business into the future, that motivation can be a powerful device. Employees at every level want to know their employer is taking steps to advance their company. One of the fastest ways for the next generation of leadership to demonstrate this is by embracing a strategic vision supported by financial and capital literacy.
Leveraging Capital Relationships to Make Your Mark
The availability of capital targeting the lower middle market has never been stronger. Traditional bank financing and Small Business Administration (SBA) loans are now supplemented by private debt and a range of control and non-control equity providers. Many capital providers are far more interested in long-term growth and dividend returns than a quick transaction. These make natural partners for mid-career leaders stepping into strategic roles and looking to make an immediate impact.
With the influx of a variety of capital providers targeting the lower middle market, a host of forward-thinking avenues now exist to help new business leaders make a splash with resources they wouldn’t otherwise have. Next-gen owners can access debt and equity to strengthen a business, assemble a more robust management team, jumpstart growth or capture a transformational acquisition. One powerful way to survive in a rapidly consolidating industry—especially one with increasingly more sophisticated, capital-backed competitors—is to exhibit some mastery of the latest financial techniques used by others. Properly structured, this is an inflection point that allows the new leader to build their own track record in short order.
For outgoing leaders, the expansion of capital availability is a compelling reason to involve their offspring in accounting, banking and acquisition discussions early. Financial literacy is rarely taught in school and almost never fully grasped until it’s encountered in the field. The owners who start these conversations early give their successors a head start that pays dividends long before the formal hand-off occurs. It is also worth noting that not all capital providers are created equal. Banks and other capital providers that have demonstrated a genuine appetite for this industry and stayed the course through economic shocks and rough patches are worth knowing and cultivating. Those relationships can take years to build.
Don’t Just Run It. Elevate It
The next generation of fuel and HVAC leaders will operate in a more competitive, more consolidated and more financially sophisticated environment than their predecessors. The companies that thrive won’t be the ones that simply passed the company on to the next generation, but instead the ones that used it as a launching pad to greater things. If you are a next-generation leader preparing to take the reins, press to be included in every financial conversation your business has, including banking reviews, acquisition evaluations and capital planning. If you are an owner eyeing an exit or a transition, open those doors to the next generation years before you are ready to leave.
The window to build operational credibility takes time that cannot be compressed. Yet the window to demonstrate to your team, vendors, bank and capital partners that you understand the financial tools available and intend to use them opens the moment you choose to embrace it. ICM
Jeff Simpson is the Founder and managing member of Notch Capital, a private investment firm specializing in buyouts and recapitalizations of lower middle market businesses in the heating, cooling and home services industries. Notch Capital also provides advisory services to help these businesses strengthen their performance and analyze acquisitions.
