HB Global is a near-100% employee-owned company based in Harrisburg, PA that provides HVAC, plumbing, and electrical services. HB Global has pursued an aggressive acquisition strategy — which has driven nearly eightfold growth in revenue since the company started its Employee Stock Ownership Plan (ESOP) in 2010 — while making considerable investments in its growing workforce of employee-owners.
Herbert Bassett McClure founded HB McClure in 1914, and in 1931 the company established its headquarters in Harrisburg. A year later, two inventors pioneered an individual room air conditioner that could sit on a window ledge, and HB McClure soon after entered the air conditioning business. By the 1980s, the company had expanded to commercial HVAC services.
In 2008, with the Great Recession looming, Bob Whalen took over as the company’s new owner from its third generation of family ownership and became President and CEO. Soon after becoming the new owner, Whalen identified ESOPs as an effective tax-advantaged strategy to ensure the company’s long-term stability. After gaining the support of the board of directors, he sold the company back to the employees in 2010 in the ESOP transaction.
The company then embarked on a growth strategy that included 19 acquisitions between 2011 and 2020, and it established HB Global, LLC in 2017 as the holding company for the new divisions.
“When we started the ESOP, we were all within about 45 miles of Harrisburg,” Whalen said in a recent interview. “Today we have eight divisions spanning nine states and the U.S. Virgin Islands. We are now doing work across the Southeast, Mid-Atlantic, and New England regions as well as Arizona.”
Acquisitions have helped the company diversify its clients across industries, including large contracts with government, life sciences, healthcare, and convention centers. Between 2010 and 2020, the company’s revenue surged from $25 million to $275 million, and it plans to become a perennial billion-dollar company within the next decade.
But acquisitions of existing companies have not meant cutting staff. “A big part of what private equity does is they find synergies, which is code for reducing headcount. We do none of that,” Whalen said. “Our strategy is to grow these businesses and create value for our employee-owners, it’s not to shrink them.”
HB Global employs over 1,700 individuals, most of whom are now employee-owners who become eligible after one year of service. Since it created the ESOP, the company has generated over $87 million in retirement savings for employee-owners. For the average field technician who has been with the company since it became employee-owned a decade ago, their ESOP account has generated more than $203,000 in retirement savings, driven in part by the company’s 12% contribution of annual compensation to ESOP accounts. (The current average U.S. net worth at retirement age is $213,000.) Whalen has a strong belief that every business has an obligation to build wealth for their employees through retirement savings, with employees at all levels sharing in the success or failure of the company.
“Our intent is for this structure to go on for multiple generations and to continue to thrive,” Whalen said. “That doesn’t happen in three years or five years. It certainly doesn’t happen on a quarterly basis. Everything we’re doing is really a multi-generational project.”