News & Resources
This month’s AH Market Update spotlights the Home Services industry, which includes sectors such as Home Restoration, HVAC, Plumbing, Pest Control, and more. Read the full report below which includes recent transaction data, market insights, and notable transactions shaping the Home Services landscape.
Residential services have long been a focus area for private equity investors and family offices. The recession proof nature of the work, a highly fragmented market, and operational improvement levers make the industry an ideal candidate for a private equity roll-up strategy. While there can be variance in deal volume over periods, demand for investment opportunities and acquisitions remains strong and competitive. This demand is evidenced primarily by transactions which indicate elevated EBITDA multiples relative to other industries.
While macro trends remain relatively unchanged, investors remain bullish on residential services outlook due to high mortgage rates, lower affordability of new homes, and the aging housing stock. Because many homeowners are choosing to invest equity into their existing homes rather than a new one, residential services focused on home improvement (HVAC, roofing, plumbing, restoration, etc.) are receiving premium valuations. While overall deal volume is down, we have noticed a deeper emphasis from investors on quality assets, resulting in the $100M median transaction value. These investors are looking for residential service businesses with the following characteristics:
Recurring Revenue – The recurring nature of predictable income streams (maintenance contracts, membership programs, and service agreements) helps de-risk the investment and allows an acquirer to pay premiums.
Standard Operating Procedures – Documented processes, employee training, and general standard practices signals smooth ownership transitions and scalability.
Tech Integration – Operational efficiency through detailed accounting and billing practices, job management software, online scheduling, AI integration, ERP and CRM systems maximizes margins.
Strong Brands – Positive online reputation through Google Reviews and Yelp will formulate customer perception and drive new business. Business owners who are looking to exit in the future should focus on these operational improvements in order to drive a successful transaction at a favorable valuation.
For businesses in the industry considering a sale, the key is not simply finding a willing buyer but ensuring that you choose the right partner for your customers, employees, and legacy. At Alexander Hutton we have represented sellers to both Strategic and Financial buyers in the home services category. In all cases, we have received multiple offers giving our clients “options” to choose which path delivers the best price, structure and most importantly, the best cultural fit for the next phase of growth.
Some categories are in the “late innings” of consolidation (plumbing and HVAC) while others are in the “early innings” of consolidation (Restoration, Pest Control). Whether as a buyer or a seller, please reach out for a complimentary perspective.
Led by a team of former business operators and executives who have built and sold companies, Alexander Hutton is a boutique, middle market M&A advisory firm that has completed 230 successful transactions. We offer a unique understanding of what it takes to run a business and an accessible team dedicated to client service. By running a high-touch, competitive transaction process for each of our clients, we are able to help them achieve their ideal outcome.
Connect with the team at Alexander Hutton and talk to us about the future of your company.