Private Equity in Home Services: What It Means for You

Private equity firms have acquired more than 800 home service companies since 2022. HVAC, plumbing, electrical, roofing, garage doors. Every trade is getting consolidated.

The money behind this push is staggering. PE firms are sitting on roughly $1 trillion in “dry powder” - capital raised from investors that needs to be deployed. Home services became a target because the fundamentals are attractive: recurring revenue potential, fragmented markets with thousands of small players, and essential services that don’t disappear in recessions.

This changes the competitive landscape for every independent contractor. Understanding what’s happening helps you compete effectively against roll-ups that have resources you can’t match.

How the roll-up model works

PE firms don’t buy one company and operate it. They build platforms through acquisition, combining multiple businesses under shared infrastructure.

The playbook is consistent across firms. They start with a “platform” acquisition, typically a company doing $5-20 million in revenue with strong management and good market position. They pay 5-7x EBITDA for these anchor deals.

Then they add “tuck-in” acquisitions. Smaller companies in the same market or adjacent geographies get absorbed into the platform. Tuck-ins typically trade at 3-5x EBITDA because they’re dependent on the platform for growth.

The math works through multiple arbitrage. Buy companies at 4x EBITDA, combine them into a larger entity, sell the combined platform at 8x EBITDA. The difference is pure profit for the PE firm.

The major players

Several PE-backed platforms have become dominant forces in home services.

Wrench Group operates in HVAC and plumbing across multiple states. They’ve acquired dozens of companies and run them under various local brand names. Revenue reportedly exceeds $500 million.

CoolSys focuses on commercial HVAC and refrigeration, but has expanded into residential through acquisitions. They’re backed by Ares Management and have built a national footprint.

Apex Service Partners has rolled up HVAC and plumbing companies across the Southeast and continues expanding. They maintain local brands while consolidating back-office operations.

HomeServe, publicly traded in the UK, acquired Linx Electric and other home service businesses to build their North American platform. They focus on membership programs and emergency services.

These platforms compete in markets where independent contractors have operated for decades. The competitive dynamics are changing fast.

What PE-backed companies do better

Be honest about where roll-ups have advantages. Pretending they don’t exist won’t help you compete.

Marketing spend and sophistication

A PE-backed platform with $100 million in revenue can spend $5 million on marketing without flinching. They have dedicated marketing teams, agencies on retainer, and budgets for TV, radio, digital, and direct mail simultaneously.

They run sophisticated digital campaigns with proper attribution. They test landing pages. They optimize bids by zip code. They have the data and resources to do marketing at a level most independents can’t match.

When you’re competing for the same Google Ads keywords, they can outbid you indefinitely. Their cost per lead might be higher than yours, but they’re playing a different game.

Technology and systems

Enterprise CRMs, inventory management systems, call center software, dispatch optimization. The tech stack at a PE-backed platform often costs more than an independent contractor’s annual profit.

These systems create efficiency gains that add up. Better routing saves fuel and time. Automated follow-up captures more conversions. Integrated inventory prevents stockouts.

They also have IT staff to maintain and optimize these systems. When something breaks, they have internal resources to fix it.

Training and process standardization

Roll-ups typically invest heavily in training programs. They bring technicians to central facilities, run them through standardized processes, and measure performance against benchmarks.

This creates consistency. A customer calling any brand in the platform gets a similar experience because everyone follows the same playbook.

The training also extends to sales. Technicians learn upsell techniques, financing options, and objection handling. They convert more quotes into jobs because they’re systematically trained to do so.

Purchasing power

A platform buying 10,000 air handlers per year negotiates better pricing than a contractor buying 50. Equipment, supplies, vehicles, insurance. Everything costs less at scale.

These savings drop straight to the bottom line. Lower costs mean more margin to invest in marketing, pay technicians, or simply profit.

Where PE-backed companies struggle

Roll-ups have weaknesses. The contractors thriving despite consolidation exploit these gaps.

Customer relationships are transactional

When a PE firm buys a local HVAC company, they often lose the personal relationships that made that company successful. The founder who knew every customer by name is gone. The technician who serviced the same neighborhood for 15 years moved to a different route.

Customers notice. They liked calling the local shop where someone recognized their voice. Now they get a call center reading scripts.

The data supports this. Customer retention rates at roll-ups often decline post-acquisition. Churn increases as the personal touch disappears.

Technician retention is a constant problem

Technicians at PE-backed companies frequently report dissatisfaction. The culture changes post-acquisition. Metrics and quotas replace autonomy. The family feel disappears.

Turnover in home services is already high. At roll-ups, it’s often worse. And technician turnover directly impacts customer experience and service quality.

Good techs leave for independents who treat them better. They take customer relationships with them.

Multi-brand confusion hurts trust

Many roll-ups operate multiple brands that were formerly competitors. They maintain separate brand names but share back-office operations.

Customers eventually figure this out. When they realize that three “different” HVAC companies are actually the same PE-backed platform, trust erodes. It feels deceptive, even if it’s technically disclosed.

Speed often suffers

Centralized call centers and standardized processes can slow response times. A local contractor answers their phone and dispatches a truck. A roll-up routes the call to a central queue where it waits in line.

The speed-to-lead advantage that many independents have built becomes even more valuable when competing against slower, larger players.

Aggressive upselling damages reputation

PE firms need returns. That pressure often translates into aggressive upselling that damages customer trust.

Technicians get incentivized to find additional work on every call. What used to be a $150 service call becomes a $2,000 repair recommendation. Customers who’ve used the same company for years suddenly feel they’re being sold to rather than helped.

Reviews reflect this. Many roll-ups see rating declines after acquisition as customers complain about pushy sales tactics.

What this means for independents

Consolidation isn’t going away. The capital is there and the returns justify continued investment. But independent contractors aren’t disappearing either.

You won’t win on budget

Accepting this reality is step one. You cannot outspend a PE-backed platform on marketing. Trying to compete on ad spend is a losing strategy.

But you can be more efficient with every dollar. When you capture more leads from the same traffic, your effective cost per acquisition drops. When you respond faster and convert better, the same marketing spend produces more jobs.

Read about capturing the visitors who leave without converting to understand how smaller players can compete through efficiency rather than budget.

Speed is your weapon

78% of customers go with the first contractor to respond. PE platforms often struggle with speed because calls route through central systems.

Answer faster. Follow up immediately. Make speed your competitive advantage.

When a homeowner’s AC dies in July, they’re calling multiple companies. The roll-up might respond in two hours through their call center. You respond in five minutes. You get the job.

Relationships still matter

Roll-ups are buying companies, not relationships. They can acquire brand names and customer lists, but they can’t acquire the trust that took decades to build.

Double down on what makes you different. Same technician every time. Owner involvement. Genuine local presence. These things matter to homeowners, and roll-ups can’t replicate them at scale.

Consider the exit opportunity

PE appetite for acquisitions creates opportunity for contractors considering an exit. If your business is well-run with good systems and recurring revenue, you might be an attractive tuck-in acquisition.

The multiples for selling a home service company are higher now than they’ve been historically. Contractors who prepared properly are getting 4-6x EBITDA for quality businesses.

If you’re not ready to sell, that’s fine. But understand that the option exists, and the current environment is favorable for sellers.

Competing effectively

The independents who thrive in a consolidated market focus on what they can control.

Capture more from existing traffic

You’re already paying for website visitors. Most leave without converting. When 96% of traffic disappears, fixing that problem is worth more than increasing ad spend.

Knowing who visits your site, what they looked at, and how to reach them before they call someone else changes the game. Read about visitor identification to understand how this works.

Build recurring revenue

Maintenance agreements create predictable revenue and ongoing customer relationships. PE firms love recurring revenue, and you should too.

A customer on a maintenance plan has a reason to stay with you year after year. They’re not shopping for a new HVAC company when something breaks because they already have a relationship.

Systematize operations

PE platforms win through systems. You can build systems too, without the overhead.

Document your processes. Automate your follow-up. Track your metrics. The same operational discipline that makes roll-ups efficient is available to independents who commit to it.

Be the local option

Marketing messages that worked before work even better now. “Locally owned, not corporate.” “Same technician every visit.” “Owner on every job.”

Homeowners who’ve had experiences with roll-ups often become actively skeptical of big platforms. They want the local option. Make sure they know you exist.

The market is bifurcating

Home services is splitting into two segments. Large PE-backed platforms compete at scale with big marketing budgets and standardized operations. Independent contractors compete on relationships, speed, and local presence.

The middle is getting squeezed. Mid-sized companies without the scale to compete on marketing and without the agility to compete on relationships face the toughest road.

If you’re an independent, lean into what makes you different. If you’re mid-sized, either grow quickly or optimize for an exit while valuations are favorable.

The $1 trillion in PE dry powder isn’t going away. More acquisitions are coming. The question isn’t whether consolidation will continue, but how you position yourself in the market it’s creating.