Buying Home Services Companies

Short answer: Private equity is paying 17 to 20 times earnings for home services platforms and buying companies your size at 4 to 8 times. That gap is the whole reason capital is flooding into HVAC, plumbing, electrical, and landscaping. An owner-operator can run the same play with far less capital, and against those platforms you have one advantage they cannot manufacture.

Why these trades are consolidating

The arithmetic is simple and it explains everything happening in the market.

Blackstone acquired Champions Group in February at an implied 18.5 times EBITDA. Altas Partners took Redwood Services at roughly 17 times. Goldman's Sila Services traded in the same range. Those are platform prices.

Those same platforms then buy companies in the two to ten million range at 4 to 8 times. The moment a deal closes, that business is worth roughly three times more inside the platform than it was outside it. Nothing about the company changed. Only the ownership did.

That is multiple arbitrage. It is not a trick, and it is not limited to private equity.

If your business is worth 6 times today and you buy a company at 4, the same gap works in your favor. You will not exit at 18. But you do not need to. The gap compounds every year you keep doing it, and you are using debt rather than fund capital to close it.

That is the case for an owner-operator running an acquisition program instead of selling into one.

The pattern underneath all four trades

HVAC, plumbing, electrical, and landscaping look like different businesses. Structurally they are the same business with different equipment.

Each one has a project side and a recurring side. Installation, new construction, and one-off jobs on one hand. Service, maintenance agreements, and repeat contracts on the other.

The project side is low margin and consumes working capital. You carry material and labor, and on anything construction-adjacent you wait on draws. It looks like revenue and behaves like a loan you made to your customer.

The recurring side is where the money is. High margin, paid quickly, and it renews. This is the part that makes these businesses worth buying.

The mistake is treating the project side as a bad business to be tolerated or shed. It is neither. The project side is how you acquire the customer you will serve for the next fifteen years. Every system installed, every panel upgraded, every property put under contract is an annuity you paid to originate.

So when you evaluate a target, the question is not which side of the business is more profitable. It is whether the project work they do actually feeds a book you will keep.

And in all four trades the binding constraint is labor, not demand. There is more work than there are licensed technicians, and that has been true for years. You cannot hire your way into capacity. That is the single strongest argument for growing by acquisition in this sector: you are buying a crew you could not otherwise assemble.

Who you are competing against

Apex Service Partners, backed by Apollo. Wrench Group, backed by Leonard Green. Service Logic, backed by Bain Capital. Sila, Redwood, Champions, and a long tail of regional platforms behind them.

They are well capitalized, they move fast, and they are calling the same owners you are.

You will not outbid them, and you should not try.

What you have is the thing capital cannot buy. You are a local operator with a name in the market. The seller has known your trucks for twenty years. When an owner is deciding who takes over the company they built and the crew they hired, a private equity platform headquartered in another state is not always the answer they want, even at a higher number.

That preference is worth real money in the negotiation. It is the most reliable reason owner-operators beat platforms on deals they should have lost on price.

So what is your thesis?

Four questions. The answer determines what you should be buying, and it is worth writing down before you look at a single target.

What is your base today, and do you want more of it? If you are strong in one trade in a defined territory, the cleanest acquisition is another book of the same work in the same market. Route density improves, your existing overhead absorbs more revenue, and you already know how to run it. Lowest risk, and where most owners should start.

Do you want to expand the service offering? An HVAC company that adds plumbing is selling more to customers it already has. A landscaping company that adds irrigation or lighting is doing the same. The install base you already paid to acquire gets monetized twice, and the acquisition target is in a different trade than yours.

Do you want to change customer segment? Residential into light commercial is the common version. Different sales cycle, different collection behavior, contracts instead of calls. It diversifies you away from housing turnover and homeowner discretion. It also means running a business you may not have run before, so the acquired management matters far more than in a straight tuck-in.

Are you trying to expand geography? The hardest of the four. New market, no brand, no crew loyalty, and you are managing at a distance. It works when the acquired company comes with a general manager who stays. It fails when you assume you can run it from the truck.

A written thesis is worth most for what it lets you say no to. Deal flow in these trades is not the problem. Deciding what to ignore is.

How these deals get structured

When a private equity platform buys a company, the seller typically takes 50 to 70 percent cash at close, 10 to 15 percent in an earnout, and 15 to 30 percent as rollover equity in the platform. That rollover only pays if the platform exits well, which makes a meaningful share of the seller's proceeds a bet on somebody else's business, run by people they have never met.

An owner-operator can structure differently, and often better from the seller's point of view. More cash at close against a smaller headline number. A seller note that pays out of a business the seller understands and can watch. A transition period where they hand off relationships rather than report to a new corporate parent.

Price is one number in a document full of terms. In these trades, the terms are usually where the deal gets won.

Licensing, which varies by trade and breaks deals

In plumbing and electrical the master license is frequently held personally by the owner, not by the company, and it does not transfer with the sale. If the licensed individual walks at close, the business cannot legally operate.

That single fact reshapes the deal: how long the seller stays, what the transition looks like, whether you need to license someone on your own team first, and how much of the purchase price should sit behind that risk.

HVAC has certification requirements that behave similarly but are usually less concentrated in one person. Landscaping generally has no equivalent, which is one reason those deals close faster.

Ask early who holds the license and whether it is personal or corporate. It is a five-minute question that occasionally ends the conversation.

By trade

The economics above are shared. What differs is the diligence, and each trade has two or three items that decide whether the deal works.

• Buying HVAC companies. The install base as customer acquisition, maintenance agreement inflation, and the 2026 refrigerant transition.
• Buying plumbing companies (planned). The master license problem, emergency call revenue, commercial versus residential mix.
• Buying electrical contractors (planned). Licensing, project concentration, prevailing wage exposure.
• Buying landscaping companies (planned). Seasonality, snow as counter-seasonal revenue, labor visas, equipment-heavy balance sheets.