Private Equity Firms Buying HVAC, Plumbing and Electrical Companies

Heating, cooling, plumbing and electrical contractors have become one of the most active areas for private equity buyers. The reasons are practical. Equipment breaks and wears out whatever the economy is doing, many homes and buildings need the same service every year, and most markets are served by local family-owned companies without a succession plan. A buyer can bring several of those companies together and share recruiting, purchasing, dispatch software and marketing across them.

Buyers split along two lines. The first is residential versus commercial. Residential platforms care about call volume, the share of revenue from service and replacement rather than new construction, maintenance plan members and how leads are generated. Commercial buyers care about service agreements with building owners, the balance of service and project work, and the certifications their technicians hold. The second line is platform versus add-on. Many of the firms below already own a large home services or mechanical contracting group, so a local company with a few million dollars of revenue will usually meet them as an add-on.

Diligence tends to focus on the same handful of numbers: revenue by trade and by type of work, gross margin on service calls compared with installations, how many customers are on a maintenance agreement and how many renew, technician headcount and turnover, and how much work comes from a few builders or general contractors. Licensing matters too. In many states the license sits with one person, and a buyer will want to know who holds it and whether that person is staying.

For an owner, the questions that matter most are about people and brand. Will your name stay on the trucks? Will your service managers and best technicians be offered equity or retention bonuses? Will you be asked to roll part of your proceeds into the larger company, and on what terms? Buyers that have done many of these deals usually can answer these quickly, and the profiles below show which firms are buying now and how their recent deals were put together.

Greymont is paid by buyers, never by owners. Greymont can help you see which of these firms are buying in your trade and region today, and which ones suit a company of your size, whether a sale is next year or further out.