Publish Date
Mar 05, 2025
Trading Up: PE Firms Have Been Investing Heavily in Trade Services, Now the Question Is How To Grow Them
Service / Industry: Operations Management, Finance
Private Equity (PE) firms have been very aggressive recently in trade companies, with over 890 PE deals completed in these “ho-hum” sectors since 2021. HVAC has been particularly a hot space with over 620 deals.
This hunger for trade companies was featured by Te-Ping Chen, a front-page Wall Street Journal author, in October [1]. In the article, Chen wrote, “PE firms across the country have been scooping up home services like HVAC as well as plumbing and electrical companies [Trades]. They hope to profit by running larger, more profitable operations.”
Now that PE firms are more invested in the Trades, they face the challenge of professionalizing these businesses and accelerating EBITDA growth. In this space, larger does not necessarily mean more profitable. In fact, if PEs get it wrong, larger can be a disadvantage.
A&M’s experience shows that there are key topics PE firms need to get right both in professionalizing the business and accelerating EBITDA growth that are critical to the Trades but that often don’t get addressed. This article outlines the key themes to get right to ensure profitability as Trade businesses get larger.
[1]. America’s New Millionaire Class: Plumbers and HVAC Entrepreneurs. https://www.wsj.com/business/entrepreneurship/plumbers-hvac-skilled-trades-millionaires-2b62bf6c
Authors
Brian Long
Brian Long is a Managing Director with Alvarez & Marsal Private Equity Services Operations group in Chicago. He brings nearly 20 years of experience in strategy consulting and functional leadership, having been general manager of a $15 billion manufacturing business and managing director of a private equity fund where he delivered rapid EBITDA improvements.
Benjamin Taylor
Ben Taylor is a Managing Director with Alvarez & Marsal Private Equity Performance Improvement in Atlanta. With more than 20 years of operating and consulting experience, he focuses on interim leadership, operations strategy, new product introduction, and process improvement execution.
Anil Kumar
Anil Kumar is a Managing Director and Generative AI Leader with Alvarez & Marsal’s Private Equity Services New York. He specializes in pre-acquisition technology diligence and post-acquisition technology transformation in support of private equity investments. Mr. Kumar has experience in generative AI implementation with a specialization in Natural Language Processing, Large Language Models and Vector Database.
