NearU Services founder on organic growth, M&A, and the technology dilemma

M&A volume among HVAC-focused private equity-backed platforms was down single digits heading into the fourth quarter of 2024, according to Capstone Partners. However, investors have expressed confidence about deal activity accelerating this year.

Meanwhile, the industry is recovering from a post-Covid slump, and AI has become the world’s biggest buzzword. To get one buyer’s input on today’s dynamics, I spoke with Ashish Achlerkar, founder of NearU Services — which counts 26 brands across the Southeast and West — about organic growth, M&A, and ‘shiny object’ syndrome. Our conversation has been lightly edited for clarity. 

How was last year for NearU from an organic growth standpoint?

From a top and bottom-line perspective, we saw strong growth in our Carolina and Virginia portfolios, compared to 2023. We saw softness in California and Arizona, similar to other players in that space, but 2024 was solid for us.

Why the discrepancy between markets?

Multiple factors are at play for different markets — for example, it could be a function of the install base’s age. Cycles depend on how old or new the installed equipment is. There was also a lot of uncertainty in the economy leading up to the election, and interest rates were higher, which drove more reserved consumer behavior.

What have you observed recently, M&A-wise? Deal volume, multiples, etcetera.

Everybody has been conservative in terms of how they think about deal-making, but I haven’t seen too much softness in multiples yet. The smaller assets have come down a bit, but larger assets are still trading similarly to 2022. 

It’s on the acquirer to be disciplined, because if you force the math to work on the front end, you end up paying for it somewhere down the line, especially culturally. So I’d say it’s been slower for the right reasons.

Based on my conversations, the sentiment heading into this year was that deal activity would pick up. Do you share that view?

We’re already seeing it pick up. I think the larger platforms with an established regional or national presence will be focused on building critical mass in their current markets, so you’ll see a lot of tuck-in activity. 

Deal activity won’t stop. It’s still a very attractive sector with tremendous demand. However, fewer platforms are getting into the space. I think net new platform formations have probably gotten to a steady state, and the main driver of growth will be from existing players in the space. 

There are pros to consolidation, but skeptics remain everywhere, just like in every industry. Obviously, you’re on the platform side, but how do you think about that?

I think you have to contextualize everything with the “why” behind M&A. It’s one thing to have capital, but the industry needs to ask what M&A’s role will be in solving for a better customer and employee experience. How do we make the industry better by leveraging balance sheet strength and economies of scale? That’s what the focus should be on. 

If you think about customers’ pain points today… they want transparent, trustworthy, and consistent service. If an independent provider can provide a certain level of service, will that hold or improve because of consolidation? I think those are the types of conversations that need to be happening in boardrooms before people decide whether they want to continue acquiring companies or not. I don’t think there’s a formulaic answer. 

Can you share anything about NearU’s strategy for this year, M&A aside?

Our priorities revolve around providing more structure, processes, and systems that allow our branches to do a great job for customers and team members. 

That’s the overarching goal, and we’ve distilled down it into different initiatives. Our management team is investing in data and analytics support for branches so they can make more data-driven decisions and know how their efforts are translating into performance. 

We’re focused on people-centric initiatives, too. If our team members are knowledgeable and motivated, then our customers will be happy. And if our customers are happy, we’re going to win.

There are more tech companies in the industry today with ‘AI’ plastered on their websites than probably ever before. How do you think about balancing leaning in with avoiding ‘shiny object’ syndrome?

Just because technology is available, and someone can develop a tool, it doesn’t mean they should. I’d start with the basic, “Why it should exist.” What is it that contractors need that isn’t there today? I’ll give you an example: Customers are starving for transparency, but they’re starving for data-driven transparency about the services being provided to them. 

If you give contractors the ability to extract data out of these systems and provide it to customers in a manner that they can digest, and say, “Sir, here’s the information about your machine that really informs my recommendation to you today, and I want to make sure you’re making an informed decision,” that’s tremendously powerful.

That’s my approach: Let’s make technology an enabler of relationships, not just a means to get a transaction done. And if you take that approach, you can better prioritize and decide what’s useful to you. The biggest return on technology is if it makes customers’ and team members’ lives better.