New Private-Equity Gold Mine: Heating and Plumbing

Wall Street Journal reports on how small HVAC and trade companies are being scooped up
By John Johnson,  Newser Staff
Posted Oct 19, 2024 10:00 AM CDT
Hot New Private-Equity Field May Be a Surprise
Stock photo.   (Getty/EyeEm Mobile GmbH)

The Wall Street Journal reports that a "new class of millionaires" is rising in America, and it has nothing to do with hedge funds or Silicon Valley. Instead, this one centers on plumbers, electricians, and HVAC technicians—specifically, those who started their own small shops in years past. It seems that private-equity firms across the US have been buying up small home-service repair businesses with the goal of lumping them together in one large, profitable company. The newspaper counts about 800 such acquisitions since 2022 among PE investors. "Everybody and their uncle owns an HVAC business in the private-equity space today," says Adam Hanover, chairman of Redwood Services, which has bought 35 such companies in the past four years.

A big-picture takeaway from the story:

  • The strategy "marks a major shift, taking home-services firms away from family operators by offering mom-and-pop shops seven-figure and eight-figure paydays," writes Te-Ping Chen. "It is a contrast from previous generations, when more owners handed companies down to their children or employees."
The story includes multiple real-world examples, including those in which the seller and employees remain with the bigger firm in some capacity. "It's like we're finally seen and recognized," says Dana Spears, who recently sold her HVAC company in Land O'Lakes, Florida, to a PE firm for an unspecified amount. "The trades are one of the businesses that, if you have the grit, you can go and do the American dream." (Read the full story.)

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