The HVAC acquisition trend continues

Southern Home Services announced the acquisition of Presidential Heating & Air Conditioning (MD), and Tucker Hill Air, Plumbing, & Electric revealed that their 2024 strategy revolves around acquisitions.

• Southern, now operating in 11 states, targets residential-focused companies with revenues from $3m to $50m.

• Tucker Hill, based in AZ, will target companies with revenues from $1m to $20m.

Interestingly, both companies are steering clear of businesses with over 10% exposure to new construction.

What’s happening: It’s fair to assume that acquisitions will continue. Scaled players, including private equity groups, recognize the structural advantages of HVAC — recession resilience, an aging housing stock, recurring maintenance revenue — and are moving fast to capitalize on them.

Insight: As these companies make acquisitions, they gain scale. And with scale, comes advantages:

• Purchasing power increases, making it easier to negotiate better prices from suppliers.

• Shared infrastructure across portfolio companies — accounting, operations, payroll systems — saves back office time and money.

• Large datasets allow them to optimize sales and marketing, and adjust spending in real time to the best-performing channels.

• Hefty balance sheets enable investments in employee retention, including superior benefits packages and technology so technicians can focus on their craft, not follow-ups.

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