Private equity has been quietly rolling up HVAC, plumbing, and electrical companies for a few years now. Apex Service Partners alone has assembled 107 brands as of this March. Blackstone paid $2.5 billion for Champions Group in February, at more than 18 times earnings. Goldman Sachs and Altas Partners have their own platforms doing the same thing. Everyone online is treating this like a heist.
It isn’t one. Not exactly.
The Value Was Never In the Business
Here’s my actual take. A $1 to $3 million service business is worth almost nothing to a normal buyer, and it has nothing to do with how good the business is. It’s because the owner is the operating system. Every decision, every judgment call, every customer relationship runs through one person.
The numbers back this up. Only 30 percent of small businesses that go up for sale ever find a buyer, according to the Exit Planning Institute. The median close rate on listed businesses was just 6.46 percent between 2018 and 2022. That’s not a market full of bad businesses. That’s a market full of businesses nobody but the owner can actually run.
PE Didn’t Find a Loophole. They Found Your Job Description
Private equity buys these companies at four to eight times earnings if they’re smaller, six to eleven times if they’re bigger. Then they do one specific thing: they take the owner out of the center of every decision. Build a real management layer. Standardize the processes. Make the business run the same way whether the founder is in the building or on a beach.
Once that’s done, the whole platform sells for 17 to 20 times earnings. Same business. Different price. The only thing that changed is that it stopped depending on one guy.
That’s not a secret PE formula. That’s the exact fix I sell for a living. They’re just doing it at scale, with a checkbook, before the owner gets the chance to do it himself.
This Already Happened. Ask Any Vet.
If this feels new, it isn’t. The same playbook already ran through veterinary medicine. A decade ago, corporations and private equity firms owned under 10 percent of U.S. vet clinics. Today it’s somewhere between 30 and 50 percent, and prices for routine care have climbed 60 percent over that stretch, according to the American Economic Liberties Project.
Trades are just next. And it has a floor. Nobody’s rolling up a $1 million company, the deal is too small to bother with. But a $2 million shop that runs reasonably well is squarely in range. That gap between “too small for PE” and “well run enough to sell” is exactly where most of my clients live.
The Opportunity Nobody’s Talking About
Here’s the part that gets lost in all the doom posting. This isn’t only a threat story. There’s a real exit sitting inside this trend for owners who get organized, and almost nobody knows it’s there. Nearly two-thirds of family businesses don’t have a documented succession plan, according to PwC. Most owners have never sold a company in their life. They don’t know a single person who has.
I’ve helped several clients sell their businesses over the years, a couple of them to PE-type buyers. The buyer’s side of that process is a well-oiled machine. They’ve done this dozens of times. You negotiate within their parameters and it moves fast.
The part owners get wrong is trusting the wrong buyer. Some of these firms will tell you exactly what you want to hear in the room, then start firing people and jacking up prices the week after your check clears. You need a real filter for who you’re selling to, not just a number on a page. Assuming good faith from a stranger with a checkbook is how you find out the hard way.
Get Organized Before You Need To Be
If you own a small service business, the fix is the same whether you plan to sell in two years or never. Get your financials in order. Most owners avoid this longer than they’ll admit, it’s the part everybody dreads and nobody schedules time for.
Then get yourself out of the center of every decision. Build the systems and the people so the business runs without you approving every quote and answering every call. That’s not just what makes a company sellable. It’s what makes it worth owning in the first place.
You don’t need to decide today whether you’re selling. You need to stop being the reason nobody else could run it if you did.