HVAC investments flowing to the South, analysis shows

Between 2022 and 2024, private equity-backed platforms favored the South when making acquisitions, according to a new analysis of 88 HVAC deals by investor-focused news site PE Hub. 

What’s happening: 61 percent of the residential deals analyzed took place in the Southeast and Southwest, while 46 percent of commercial deals were concentrated in the Southeast alone. 

• “It isn’t that buyers are prioritizing a specific geography for the sake of geography,” Casey Schwartz, co-lead of investment bank Houlihan Lokey’s home services practice, told PE Hub. 
• “It’s that buyers are prioritizing geographies that offer attractive business characteristics like population growth or density, relevant weather patterns, or competitive dynamics,” he added. 

The big picture: According to the Census Bureau, the South is the nation’s most populous region and accounted for 87% of U.S. population growth in 2023. 

• Last year was also the warmest year on record for the region in 129 years, per the National Climate Report. 

Zoom in: Some private equity-backed platforms are betting heavily on the South. An industry report obtained by Homepros shows that 16 out of 48 listed platforms own companies primarily based in Southern states. 

• “Private equity is looking for good businesses, and a location’s economics factor into the investment thesis,” Schwartz noted. 

Yes, but: Deals are still happening nationwide. Of the 74 acquisitions tracked by Homepros in 2024 — most of which are residential — 32 (or 43 percent) occurred outside of the South. 

• According to PE Hub’s analysis, the Midwest ranked second for residential deals, while the Northeast ranked second for commercial deals. 

The bottom line: Though deals are set to continue nationwide, the South is clearly good at attracting more than just new residents.