If you own an HVAC company, plumbing business, electrical contracting firm, or any other trades or home services company, you've likely heard the rumors: private equity is buying up businesses like yours across North America. And it's not just rumors—it's happening at an unprecedented scale.
What was once a fragmented industry of family-owned, local businesses is rapidly consolidating. The question isn't whether this wave of private equity investment will continue—it's whether your business will be part of it, and if so, on your terms.
This article breaks down what's really happening in the trades and home services industry, why PE firms are so interested, what they're looking for, and most importantly, how you can position your business to take advantage of this historic opportunity—whether you plan to sell in two years or ten.
The numbers tell a compelling story.
Since 2014, investment firms have poured over $31 billion into hundreds of home services company acquisitions The Middle Market, according to PitchBook Data. And the pace is accelerating, not slowing down.
At the start of 2024, global buyout firms were holding a record $1.2 trillion in "dry powder"—capital ready to be invested ECA Partners. A significant portion of that capital is flowing into home services and trades businesses.
The home services industry represents $657 billion in annual revenue in the U.S. alone The Middle Market, according to a 2022 Angi report. Sales have been growing at 10 percent or more annually The Middle Market as millennials enter their prime home-buying years and aging homeowners require more maintenance and repair services.
Perhaps most striking: trade services (HVAC, electrical, plumbing, etc.) are now experiencing a wave of add-on deals that position them among the hottest sectors for private equity activity Cherry Bekaert, alongside medical services and professional services.
What does this mean for you? If you own a well-run trades business doing $1M+ in revenue, you're sitting on an asset that PE firms are actively seeking.
Private equity firms don't chase trends for fun—they follow money. Three powerful forces have converged to make trades and home services businesses irresistible investments:
The home services industry is highly fragmented, with thousands of family-owned businesses operating locally. This presents a classic "roll-up" opportunity: acquire multiple small players, consolidate back-office functions, standardize operations, and create a regional or national powerhouse worth far more than the sum of its parts.
Sean Levy, a lead partner with Ernst & Young's EY-Parthenon private equity practice, says this is "one of the hottest areas for private equity that we've seen." The Middle Market
A decade ago, nine out of 10 small business owners in the skilled trades looking for a buyout wanted to retire and be done Investmentcouncil, says Ted Polk, a managing director at Capstone Partners.
Many owners built successful businesses over 30-40 years, often with the expectation that their children would take over. But many find out too late that their children don't want to take over their business Crain's Cleveland Business. Without a succession plan, these owners face a difficult question: who will buy a business that depends entirely on them?
Enter private equity.
While no business is entirely immune to economic downturns, the home services industry comes pretty close ECA Partners. You might skip that fancy dinner during a recession, but you can't ignore a broken furnace in winter or survive a Phoenix summer with a broken air conditioner.
PE firms love businesses with:
Trades businesses check all these boxes.
If you're wondering whether this is real or just hype, here are some of the major private equity firms and platforms actively acquiring trades and home services businesses:
KKR, one of Wall Street's biggest investment firms, acquired Neighborly (formerly Dwyer Group) in 2021 The Middle Market. Based in Waco, Texas, Neighborly has acquired home services companies across the U.S., U.K., Germany, Austria, Portugal, and Ireland The Middle Market.
Neighborly's 5,500 franchises—with names like Mr. Rooter Plumbing, Molly Maid, and Mosquito Joe—reported $4.1 billion in sales last year The Middle Market.
Based in Sarasota, Florida, Wrench Group reports $1.5 billion in annual revenue from companies like Parker & Sons in Arizona and Buckeye Heating, Cooling & Plumbing in Ohio The Middle Market. Its PE backers include Leonard Green & Partners, TSG Consumer Partners, and Oak Hill Capital Partners The Middle Market.
Founded in 2020 and based in Memphis, Tennessee, Redwood has partnered with 18 contracting businesses across the U.S. and generates over $500 million in annual revenue Homepros. In 2025, Toronto-based private equity firm Altas Partners made a majority investment valuing the company at around $1.1 billion Homepros.
Redwood has acquired 35 companies in the past four years, buying smaller outfits for an average of $1 million and taking majority stakes in larger companies averaging $20 million valuations Investmentcouncil.
Authority Brands operates 16+ home services franchise brands including One Hour Heating & Air Conditioning, Benjamin Franklin Plumbing, and Mister Sparky. The company has been aggressively acquiring brands since 2017 and continues expanding its portfolio.
Operating over 30 brands throughout the Northeast, Mid-Atlantic, and Midwest, Sila Services received a major investment from Goldman Sachs' private equity arm in late 2024 and continues actively acquiring regional HVAC, plumbing, and electrical companies.
The takeaway? These aren't fly-by-night investors. These are billion-dollar platforms backed by some of the world's most sophisticated financial firms, and they're writing checks ranging from seven figures to nine figures for the right businesses.
The wave of private equity investment is minting a new class of millionaires across the country Investmentcouncil, transforming trades business owners who built their companies from scratch into wealthy retirees—or, in many cases, wealthy executives who stay on to help grow the business.
Consider these examples:
Charlie Mullins, founder of Pimlico Plumbers in the UK, sold his company to KKR for £140 million (about $178 million) at the end of 2021 The Middle Market. The son of a toy-factory worker and a house cleaner, Mullins now lives in a £10 million London penthouse overlooking the Thames The Middle Market.
Aaron Rice, who co-founded an Arizona plumbing business, was initially skeptical when out-of-state investors approached him Investmentcouncil. But in 2022, when approached by Redwood Services, a local HVAC company backed by private equity, he changed his mind, figuring they understood the business Investmentcouncil.
Rick Walter, former owner of Rite Way HVAC in Tucson, sold to Redwood Services, retains a 25% stake, and plans to retire with his wife to their Colorado vacation home purchased with proceeds from the sale after working 60-70 hours a week for years Investmentcouncil.
In suburban Atlanta, veteran plumber Jay Cunningham turned down a $60 million offer for his company, Superior Plumbing Services Inc. Crain's Cleveland Business, choosing to keep his five grown children employed in the business. But the fact that he received such an offer shows the valuations PE firms are willing to pay.
Valuation multiples for home services acquisitions typically fall in the high single to low double digits (8-12× EBITDA), but highly scalable platforms have commanded premium multiples around 12-15× Goduo.
Translation: A well-run trades business generating $1 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) could be worth $8-15 million—potentially life-changing money for most owners.
Not every trades business is attractive to private equity. Here's what they're really looking for:
This is the #1 deal-maker or deal-breaker.
PE firms will pay a premium for businesses that run without the owner. They'll heavily discount (or pass entirely) on businesses where the owner is the rainmaker, chief technician, and operational brain.
Ask yourself:
If you answered "no" to most of these, your business isn't ready—but it can be.
PE firms conduct thorough due diligence. They'll examine:
Business owners should clean up their books and ensure financial statements are accurate, preferably reviewed by an accountant Goduo.
If your financials are messy, incomplete, or stored in spreadsheets, expect valuation discounts—or prepare for the deal to fall apart during due diligence.
Maintenance contracts, service agreements, and repeat customers are gold.
PE firms want to see:
PE firms are trying to keep existing founders in place and preserve company cultures, because workers in sought-after trades can always go elsewhere The Middle Market.
They want to see:
You don't need the fanciest tech stack, but PE firms want to see:
Even if your financials look good, certain issues can torpedo an acquisition:
❌ Owner-dependent operations — If you're the only one who can close deals, train techs, or solve problems, the business has no value without you
❌ Unreliable or missing data — If you can't prove revenue, margins, or customer metrics with confidence, PE firms will walk
❌ Legal or regulatory issues — Unresolved lawsuits, licensing problems, worker classification issues, or environmental violations
❌ Customer concentration — If 30%+ of your revenue comes from one or two customers, that's a huge risk
❌ Declining revenue or shrinking margins — PE firms buy growth stories, not turnaround projects
❌ Lack of documented processes — If the business only works because of tribal knowledge, it's not scalable
❌ High employee turnover — Constant churn signals cultural or operational problems
If you're reading this and thinking, "I'm not ready," that's okay. Most businesses aren't ready for PE acquisition without preparation.
The good news? You have time. PE firms aren't going anywhere—this trend will continue for years.
Here's your roadmap:
Document everything:
Clean up your data:
Reduce owner dependence:
Improve financial performance:
Strengthen operations:
Prepare for due diligence:
Engage advisors:
Test the market:
Decide your role post-sale:
Before you get too excited about a potential eight-figure exit, understand that private equity ownership isn't for everyone.
There are "pretty fundamental differences in practices around what it looks like for a sleepy family-owned mom and pop versus a private equity-owned machine," The Middle Market says Sean Levy of EY-Parthenon.
Potential challenges:
The Pimlico Plumbers cautionary tale:
Charlie Mullins, who sold Pimlico Plumbers to KKR, now regrets the decision. Sales declined after the acquisition, and a son and grandson quit in frustration. He hears complaints from customers who still think he's in charge, saying: "They're running it the American way, and that ain't the way to run a British company, which is on a personal basis." The Middle Market
PE acquisition is right for you if:
Consider alternatives if:
The combination of low interest rates, a booming post-pandemic home improvement market, and hungry investors created ideal conditions for high valuations Goduo. But rising interest rates put downward pressure on multiples and deal volume, and as the industry consolidates, there will be fewer attractive independent targets over time Goduo.
Translation: If you're thinking about an eventual exit, now is the time to start preparing—not when you're ready to retire.
The trades and home services industry is experiencing a once-in-a-generation transformation. Business owners who understand what's happening and position their companies accordingly will have options. Those who ignore it may find themselves competing against well-funded, professionally managed competitors with deeper pockets and better systems.
Three final thoughts:
If this article resonated with you, you're likely facing one of these situations:
At Funnel Forward, we help trades and home services businesses build the operational foundation that makes them attractive to acquirers—or simply more valuable and easier to run.
Start here:
Because whether you plan to sell in two years or twenty, building a business that runs without you is the smartest investment you can make.
Have questions about positioning your business for growth or eventual exit?