Private Equity Roll-Ups in HVAC and Plumbing: What Your Business Is Actually Worth

Your phone rings, and it's not a customer with a broken furnace — it's a stranger asking if you've ever considered selling your HVAC or plumbing company. A month later, three more calls come in. If you own a home services business right now, this isn't a coincidence. It's a wave, and understanding the math behind it is the difference between walking away with generational wealth and giving away millions without realizing it.

Why Private Equity Suddenly Wants Your Truck Fleet​

Home services businesses — HVAC, plumbing, electrical, and increasingly roofing and pest control — have become one of the hottest targets in private equity. The appeal isn't glamorous: recurring maintenance contracts, route-based density, essential (non-discretionary) demand, and a highly fragmented ownership base of aging owner-operators looking for an exit. That combination is catnip for a roll-up strategy.

The scale of capital involved is staggering. Apollo's roughly $2 billion investment in Apex Service Partners valued that platform at close to$10 billion. Blackstone paid an estimated $2.5 billion for Champions Group, at a reported valuation near 18.5x EBITDA. Goldman Sachs Alternatives took a majority stake in Sila Services at around$1.7 billion, implying a multiple in the 17–20x range. Roughly two dozen active PE-backed platforms — names like Apex Service Partners, Wrench Group, Sila Services, and Champions Group among them — are actively buying HVAC, plumbing, or multi-trade operators across the country, and add-on acquisition activity in HVAC services alone rose an estimated 88% year-over-year through mid-2025.

Here's the part every owner needs to understand before picking up the phone: the multiple you get is not the multiple the platform is worth.

The Multiple Arbitrage That Powers the Whole Model​

Private equity's roll-up playbook works because of a gap between what they pay you and what they can later sell the combined company for.

• Small owner-operator businesses ($200K–$1.5M in seller's discretionary earnings) typically transact at 2.0x–3.5x SDE.
• Lower middle-market operators ($3M–$10M revenue) trade at roughly 5.0x–8.0x adjusted EBITDA.
• Larger regional platforms (above $25M revenue) clear 9.0x–13.0x, with multi-trade platforms reaching 14x or higher.
• The platforms themselves, once assembled and scaled, sell to the next buyer (often a larger PE fund or strategic acquirer) at 17x–20x EBITDA or more.

That spread — buying assets at 5–8x and exiting a combined platform at 17–20x — is the entire economic engine. Every add-on acquisition, including yours, is a brick in a structure designed to be sold again at a much higher multiple. That's not inherently bad for you as a seller, but it explains why the buyer's incentives (grow fast, standardize systems, protect the story they'll tell the next buyer) may not match yours (maximize today's price, protect your team, preserve your legacy).

What Actually Determines Your Number​

Ask five different owners what their business is worth and you'll get five different guesses, usually based on a rumor about what a competitor sold for. The real answer comes down to a handful of concrete, checkable variables:

1. Documented, normalized EBITDA. Buyers don't pay for revenue — they pay for a multiple of a defensible earnings number. If your books don't clearly separate the business from your personal spending, a buyer can't underwrite it, and they will either walk away or discount hard.
2. Owner dependence. Can the business run for 90 days without you answering the phone? If every estimate, every vendor relationship, and every technician's schedule lives in your head, that's a discount, not a premium.
3. Revenue mix and recurring contracts. Maintenance agreements and repeat commercial contracts are worth more per dollar than one-off emergency calls, because they're predictable.
4. Line-of-business clarity. Buyers want to see install, service, and maintenance revenue broken out separately — not lumped into one number — because each has different margins and different growth trajectories.
5. Sponsor positioning. A platform early in its five-to-seven-year hold period behaves very differently from one that's about to be sold to the next buyer. Early-stage platforms integrate aggressively and push growth; late-stage platforms may be more conservative and focused on presenting a clean story for their own exit.

The Add-Back Fight Nobody Warns You About​

This is the single most common way sellers leave money on the table, and it happens after the letter of intent is signed, not before.

Every dollar you spent on personal expenses through the business, every dollar you paid yourself above what a hired general manager would cost, every one-time legal settlement or roof repair — these are legitimate "add-backs" that should increase your normalized EBITDA and therefore your price. The catch: buyers only accept add-backs they can verify with source documents. If you tell your advisor "I ran my truck payment and my kid's phone bill through the business," but you can't produce the invoices, dates, and a clear narrative tying each expense to the business's tax returns, that add-back gets rejected during diligence.

The math here is brutal. On a $5 million deal at 6.5x EBITDA, just$200,000 of rejected add-backs costs the seller roughly $1.3 million in final purchase price. Disputed add-backs are consistently the number one reason a signed LOI gets re-traded — renegotiated downward — in the weeks before closing. A sell-side quality-of-earnings (QoE) report, which independently documents and defends your normalized EBITDA before you ever talk to a buyer, typically costs$35,000–$150,000 depending on complexity, but on average adds about 0.4x to the final negotiated multiple. On an$8 million EBITDA business, that's over $3 million in additional purchase price for a report that costs a fraction of one percent of the deal.

The lesson: the year before you even think about selling is when the real value creation happens, and it happens in your accounting, not your truck fleet.

Reading the Deal Structure, Not Just the Headline Number​

The number on the offer sheet is designed to be the number you remember. It is often not the number you'll actually receive.

• Cash vs. earnout vs. rollover equity. A lower headline multiple paid mostly in cash at closing can be worth more, in realized dollars, than a higher multiple loaded with earnouts (payments contingent on hitting future targets you may not control) and rollover equity (a stake in the larger combined company that only pays off if the platform's later sale goes well).
• Rollover equity is a bet on someone else's execution. If you roll 20% of your proceeds into the platform's equity, your ultimate payout depends entirely on that sponsor successfully integrating dozens of other businesses and selling at a premium years later. That's a real bet, not a guaranteed number.
• Post-close employment terms. How long are you required to stay? What authority do you retain over hiring, pricing, and vendor relationships? These terms vary enormously between buyers and materially affect whether the deal is a clean exit or a multi-year handcuff.
• Competitive tension matters more than any single term. The first offer you receive is almost never the best one available. Owners who run a structured process with multiple interested buyers consistently negotiate better terms — on price, on cash-at-close, and on post-close obligations — than owners who negotiate exclusively with the first platform that calls.

Practical Steps If You're Even Considering an Exit​

You don't need to be actively selling to benefit from acting like you might sell in the next 12–36 months:

• Separate personal and business finances now, if you haven't already. Every commingled expense is a future argument you'll have to win with documentation.
• Break out revenue by line of business (install, service, maintenance, commercial vs. residential) rather than tracking one lump revenue number.
• Build a written narrative for every add-back as it happens — the expense, the date, the reason, the receipt — rather than trying to reconstruct three years of memory during diligence.
• Talk to an M&A advisor or CPA who specializes in home services before you talk to a buyer. Their fee is trivial compared to what a poorly prepared set of books costs you in a re-traded LOI.
• Don't negotiate with one buyer in a vacuum. Even an informal conversation with a second interested party changes your leverage in the first one.

Clean Books Are the Foundation of Every Number Above​

Every variable that drives your valuation — normalized EBITDA, defensible add-backs, line-of-business margins, owner dependence — traces back to one thing: whether your financial records are clear, complete, and auditable years before a buyer ever sees them. Waiting until you're in diligence to organize this is how sellers lose six and seven figures to rejected add-backs and re-traded deals.

Beancount.io gives small business owners plain-text, version-controlled accounting — every transaction, every add-back, every line-of-business split is documented, traceable, and ready to hand to a buyer's due-diligence team without a scramble. Get started for free and build the kind of financial record that turns an unsolicited acquisition call into a real, defensible number.