Private equity is rolling up the trades

A private-equity sponsor will pay around 18 times EBITDA for a national home-services platform and buy the independent plumbing shop that feeds it at closer to 5. That spread is the entire business. Nothing about fixing a furnace changed to justify it. The buyer changed, and with it the price of owning the company that fixes your furnace.

Home services was, until recently, one of the last genuinely fragmented markets left in the country. Roughly 30,000 HVAC contractors operate in the United States, most of them family-owned and single-location, per PitchBook’s 2025 sector work.1 Trades like this were supposed to be too small and too local to interest institutional capital. That assumption is now wrong.

The money arrived fast

Private equity closed a record 55 HVAC deals in North America in 2024, up 72% from the year before, on PitchBook data reported by S&P Global Market Intelligence.2 The pace held into 2025: the investment bank Capstone Partners counted 77 HVAC transactions in the first half of the year, 39 of them done by PE firms or their platforms, with add-on acquisitions up 88% year over year.3 Blackstone agreed to pay roughly $2.5 billion for Champions Group, an Orange County HVAC, plumbing, and electrical operator, at about 18.5 times EBITDA. Goldman Sachs Alternatives took a majority stake in Sila Services at a reported valuation near $1.7 billion.4

The consolidators have names worth knowing if you work in the trades. Apex Service Partners, backed by Alpine Investors, is the largest of them and closed on the order of 60 add-on acquisitions in 2025 alone. Wrench Group, owned by Leonard Green & Partners, now serves more than 550,000 customers a year across HVAC, plumbing, water, and electrical in metros including Denver, Dallas, Houston, and Phoenix.5 These are not regional players. They are national platforms assembled one local shop at a time.

The arbitrage is the strategy

Read the chart as one trade repeated thousands of times. A sponsor pays a mid-teens or higher multiple for the platform, bolts on small independents at 4 to 6 times their earnings, and those acquired earnings are immediately valued at the platform’s multiple. Buy a dollar of profit at 5x, hold it inside something valued at 18x, and you have manufactured value without touching a wrench. Route density and cross-selling help at the margin, but the multiple gap does most of the work.

That mechanic explains the behavior a homeowner actually notices.

Why the service call got expensive

A roll-up borrows to buy you and services that debt out of your invoice. The first lever it pulls is pricing. Consolidated ownership concentrates enough local share to set the going rate rather than meet it; the American Prospect, covering the HVAC roll-ups in 2023, described the goal plainly as local pricing power.7

The selling model changes with the ownership. Jeff Howard, an Indiana HVAC engineer whose employer was bought by Wrench Group, told the Prospect the focus shifted to “replace more boxes,” with equipment upsized and oversold and warranty calls that in his estimate doubled afterward.7 Commission pay is standard in the trades, with technicians earning 20% to 35% of the labor on what they sell, per ServiceTitan.8 Put that structure inside a platform carrying acquisition debt and the incentive to recommend the $12,000 system over the $600 repair only gets stronger. One home-services advisory, Lightning Path Partners, estimates prices at PE-backed platforms rose 15% to 25% since 2018 against 6% to 8% general inflation; that is a practitioner’s estimate, not a measured index, but it points the same way the equipment data does on its own, with heat-pump manufacturers raising prices 30% or more over the same span.9

The technician math cuts against the model

Labor is the other pressure, and it is the one the arbitrage handles worst. A senior HVAC technician earned a median near $77,200 in 2025 and an entry-level tech around $54,100, per ServiceTitan, with wages climbing 5% to 7% a year through a real shortage of trained people.8 A roll-up needs those same technicians but has to fit them inside a model where, by operators’ own accounts, a tech paid on full commission can capture half of service revenue and break the acquisition math. The usual resolution is tighter quotas and centralized pricing, which is what drives the exodus of experienced techs that Howard described after his shop was acquired. The people who do the work are the input a financial buyer is least able to compress.

What this means if you buy or operate

I look at home services and see a market where the entry price has detached from the operating reality, the same signal that showed up in car washes a year earlier. A sponsor paying 18x is buying a financing structure and a multiple story. An owner-operator buying one good shop at 4 to 6x is buying a business.

The independent’s position is better than the noise suggests. The roll-ups have handed local operators two things: a visible price umbrella to sit under or undercut, and a steady supply of customers and technicians alienated by the replace-the-box sale. A shop that keeps its senior techs, quotes the honest repair, and owns its name in one metro competes on exactly the ground the platforms defend worst. That is the kind of durable, unglamorous cash flow I want to own, and my criteria start from whether a business earns its return from operations rather than from the multiple the next buyer might pay for it.

The trades are worth owning, but not at a roll-up’s price. The platforms are underwriting an exit multiple that has to hold for the math to work. The independent is underwriting something simpler: that a homeowner who got oversold once will pay a fair price for honest work the next time. Over a long hold, I would rather own the second bet.