PE Firms Have Acquired 800+ Trade Businesses Since 2022. Is Yours Next?

Nearly 800 HVAC, plumbing, and electrical companies have been acquired by private equity since 2022.

That's the figure from PitchBook data cited by the Wall Street Journal in October 2024. And that number almost certainly understates reality. As the WSJ noted directly: "Those are just the biggest deals — plenty of smaller-scale purchases aren't tracked."

If you run an HVAC, plumbing, or electrical company, that sentence should stop you in your tracks. The official count is 800. The real count is higher — and growing every quarter.

Why 800 Is Just the Beginning

The pace of acquisition isn't slowing down. It's accelerating.

PE's share of HVAC deals went from 8% in 2023 to 23% in 2024 — a 188% increase in a single year. By the first half of 2025, PE-backed buyers were involved in more than half of all HVAC transactions globally. PE add-on deals in HVAC jumped 88% year-over-year through June 2025.

Capstone Partners tracked 149 HVAC transactions in 2025 alone — a 12.9% increase year-over-year.

The math is straightforward: there are approximately 114,000 HVAC businesses in the United States, the vast majority family-owned and generating under $10 million in annual revenue. They represent the exact profile PE roll-up platforms are designed to absorb. And over 70% of the home services market is still controlled by small local shops, according to The Alignment Firm.

PE firms didn't come here to buy a handful of businesses and call it a day. They came to consolidate an industry.

How a $1M Company Becomes Part of a $70M Platform

You need to see how this actually works in practice — not in theory.

Take Redwood Services. According to the Wall Street Journal, Redwood acquired 35 companies in roughly four years. Some of those acquisitions came in around $1 million average valuations. Smaller deals, smaller operators — the kind of shop you might drive past every day without thinking twice about.

One of those acquisitions was Rite Way. Rite Way started as an HVAC-focused operator. Under Redwood's ownership, it grew from $30 million to $70 million in annual revenue and expanded beyond HVAC into plumbing and electrical services.

That's the roll-up playbook in three sentences. Buy small. Integrate. Expand.

The individual operator who sold at $1M may look at that outcome and feel shortchanged. But here's the honest reality: most trades businesses don't grow from $30M to $70M on their own. That scale requires capital, systems, and infrastructure that the average independent operator doesn't have.

The question isn't whether PE can create that kind of value. The question is: how do you make sure you're capturing the right portion of that value when the conversation happens — or positioning yourself to create it independently?

The Three Phases of Consolidation

To know where you stand, you need to understand how consolidation cycles work. They don't happen all at once. They move in three distinct phases.

Phase 1 — Platform Creation. A PE firm acquires a cornerstone company in a target market, typically at a 6x-7x EBITDA multiple. This becomes the platform from which all future acquisitions are built.

Phase 2 — Add-On Accumulation. The platform acquires smaller operators — often at 3x-4x EBITDA — and integrates them into the platform. The individual businesses get absorbed. The platform's revenue grows. So does the eventual exit multiple.

Phase 3 — Platform Exit ("Roll-Up of the Roll-Ups"). The PE firm sells the now-scaled platform — often to a larger, mega-fund buyer — at 12x-15x EBITDA or higher. The multiple arbitrage is where the real money is made.

CFOx Advisory identifies the next 18 months as the beginning of this "roll-up of the roll-ups" phase — mid-market PE firms selling regional platforms to global mega funds. The consolidation game is entering its most aggressive chapter yet.

Where We Are in the Cycle Right Now

Not every segment of the trades is at the same point in this cycle. That matters for how you think about your own timeline.

According to PKF O'Connor Davies' Summer 2025 HVAC M&A Industry Update, the residential HVAC services segment is now midway through its consolidation cycle. That means many of the platform companies are already built, the add-on accumulation is in full swing, and the window for favorable independent exit terms is narrowing.

Commercial HVAC services, however, is described as still in its early stages. If your business skews commercial, you likely have more runway before consolidation fully reshapes your market.

The U.S. home services market is projected to reach $842 billion by end of 2026. The scale of that opportunity is exactly why PE isn't going anywhere. Multi-trade platforms are already achieving 30% higher customer lifetime value compared to single-trade operators — which means the economics of consolidation get better, not worse, as platforms grow.

The 114,000 Potential Targets — Why Most Aren't Ready

Here's the uncomfortable truth: most of those 114,000 HVAC businesses aren't actually prepared for a PE conversation. The same is true across plumbing and electrical.

PE buyers have very specific criteria. They're looking for businesses with:

• $2M-$5M+ in revenue as a baseline entry point
• 15%+ EBITDA margins (clean, normalized margins — not owner-adjusted revenue)
• 30-40%+ of revenue from recurring sources like service contracts and maintenance agreements
• Low owner dependency — the business can operate for 30+ days without the owner actively running it
• Clean financials — three to five years of organized, verifiable statements

Businesses that fail on any of these dimensions don't get the premium multiple. They either get passed over entirely or acquired at a discount — with heavy earn-out structures that push risk back onto the seller.

Owner-operator dependency alone leads to a 20-30% valuation discount or a heavily structured earn-out arrangement. If you are the business — if every key customer relationship, technical decision, and crew management call flows through you — a sophisticated buyer sees that as risk, not value.

And 40% of commercial HVAC owners have no exit plan at all. If that's you, you're not alone — but you're also leaving yourself exposed to being acquired on someone else's terms instead of your own.

What Makes You a Target

Whether you want to sell or not, understanding what makes your business attractive to PE buyers is critical. Because the same attributes that drive valuation in an acquisition scenario are the same ones that make your business defensible against PE-backed competitors.

You become a high-value target when:

• Revenue hits the $2M-$5M threshold and margins are clean
• Service contracts and maintenance agreements make up a significant share of revenue — recurring revenue survives downturns in ways that one-off emergency calls don't
• Your technician count is substantial and your retention is strong
• Your financials are organized and can withstand 60-90 days of due diligence scrutiny
• The business can run without you in the room

The inverse is also true. If your revenue is concentrated in a handful of customers, if your top 5 clients represent more than 30% of revenue, if your books haven't been properly maintained — you're either a discount acquisition or you're not on the radar at all.

The Acqui-Hire Angle Nobody Talks About

There's one dimension of this consolidation wave that deserves its own attention: the technician shortage.

There's a deficit of 110,000 licensed technicians in 2026. PE-backed platforms are competing aggressively for talent — not just for customers. Some acquisitions aren't primarily about your revenue at all. They're about your people.

The "acqui-hire" — buying a company specifically to gain access to its licensed master plumbers, electricians, and HVAC technicians — is a real phenomenon in the current market. If you have a skilled, tenured crew and low turnover, that has standalone value to a platform that needs licensed talent to execute its growth strategy.

This cuts both ways. It means your team may be worth more than you realize. It also means that if you're vulnerable to poaching — if your technicians are underpaid, undertrained, or undervalued — a PE-backed competitor can destabilize your business without acquiring it at all.

Two Paths: Position to Sell or Position to Compete

Every trades owner reading this is essentially choosing between two paths, whether they've made a conscious decision or not.

Path 1: Position to sell at a premium multiple. This means spending the next 12-36 months building the operational infrastructure, recurring revenue base, and financial documentation that commands a 7x-10x+ EBITDA multiple rather than the default 3.4x-5x that underprepared businesses get. It means reducing owner dependency, systematizing your operations, and getting your books in order before any conversation with a buyer begins.

Path 2: Position to compete against PE-backed operators. This means investing in the same things — better systems, stronger marketing, service agreements, technician development — but with the goal of outcompeting well-capitalized regional platforms rather than joining them. Over 70% of the home services market is still controlled by independent local shops, and the operators who stay independent and win do so because they out-execute on service, relationships, and local market positioning.

Both paths require the same foundation: knowing exactly where your business stands today.

Neither works if you're operating on assumptions rather than data.

What NCKTR's 45-Day Audit Reveals

Most trades owners have a general sense of how their business is doing. Revenue is up or down. The crew is solid or stretched. Margins feel right or feel thin.

That's not enough for what's coming.

What you need is an investor-grade diagnostic — the kind of analysis that answers the questions a PE buyer or a sophisticated growth partner would ask. Where is your EBITDA actually sitting after normalization? What's your customer concentration risk? What does your recurring revenue percentage look like? How dependent is the business on you specifically?

That's exactly what NCKTR's 45-day diagnostic process is built to deliver. Not a general business review. A granular, investor-grade assessment that tells you which path you're positioned for — and what you need to change to execute it at the highest level.

The Scale Roadmap gives you the strategic framework for understanding where you fit in the consolidation cycle. But the starting point is always an honest look at the numbers.

The trades consolidation wave isn't going to pause while you figure it out. The businesses that understand their position now are the ones who will control their outcomes. The ones who wait will find that someone else has made the decision for them.

You can see how your business stacks up against PE acquisition criteria and independent benchmarks — and start building toward the outcome you actually want.

What This Means for Your Business

Eight hundred acquisitions is a headline. The real story is what happens to the thousands of businesses in the path of consolidation that haven't prepared. The gap between a business that commands 10x EBITDA and one that gets passed over isn't talent or market position. It's preparation.

How many trade businesses has private equity actually acquired since 2022?

PitchBook data cited by the Wall Street Journal put the figure at nearly 800 HVAC, plumbing, and electrical acquisitions since 2022 — and the WSJ noted that smaller transactions aren't captured in that count, meaning the real number is higher. With 149 HVAC transactions in 2025 alone and PE add-on deals up 88% year-over-year, the pace is accelerating.

What EBITDA multiple will my trades business sell for?

It depends heavily on your business's quality, not just its size. The standard range is 3.4x-8x EBITDA for most businesses. Premium platforms with strong recurring revenue, low owner dependency, clean financials, and high margins can command 10x or more. Businesses with owner-operator dependency take a 20-30% discount on top of that.

What does PE look for when acquiring a trades company?

The primary criteria are $2M-$5M+ in revenue, 15%+ EBITDA margins, 30-40%+ of revenue from recurring sources, clean three-to-five-year financials, low customer concentration (no single customer over 30% of revenue), and the ability to operate without the owner present. Businesses that check all those boxes command premium multiples. Businesses that don't, don't.

Is residential or commercial HVAC further along in consolidation?

Residential is further along — PKF O'Connor Davies describes it as midway through its consolidation cycle. Commercial is still in the early stages, meaning there's more runway for commercial operators before the market fully consolidates. Both segments are active, though, and the pace is only increasing.

How do I know if I should sell now or wait?

That depends on your personal goals, your business's current state, and where you are in the consolidation cycle relative to your market. Businesses that prepare for 12-36 months before selling consistently command better multiples than those who accept the first offer that arrives. The starting point is understanding exactly where your business stands today — which is what NCKTR's diagnostic process is designed to reveal.