Private equity firms are buying HVAC businesses for millions

Private equity (PE) companies are increasingly buying skilled trade businesses that specialize in heating, ventilation and air conditioning (HVAC), and plumbing and electrical services for millions as investors find them profitable, according to the Wall Street Journal.

Since 2022, PE-backed investors have bought nearly 800 HVAC, plumbing, and electrical companies, according to PitchBook data.

One such firm, Redwood Service, has acquired 35 companies in the past four years, paying between $1 million and $20 million for each, reports the WSJ.

These purchases have made several owners millionaires and created new opportunities in the trades.

PE firms buy these companies, merge them into bigger entities, and use better management, marketing, and financial planning strategies to increase profits.

While this can mean higher prices for customers, small home-service businesses often become more profitable and help workers get raises, better wages, benefits and growth opportunities.

HVAC technicians receive a 20% pay raise after PE buys their companies, says Alpine Investors, a private equity firm that has combined 200 companies across 43 states into a larger service platform, Apex, which made $2.2 billion in business last year.

However, some workers express concerns about increased sales pressure after these acquisitions.

Ultimately, the rise of PE in skilled trades offers financial security and new business opportunities for workers and entrepreneurs alike.

Interestingly, Gen Zs are also choosing to enroll more in skilled trades training in HVAC, plumbing, and welding.