SF&P Advisors CEO on the HVAC M&A market

Buyers’ appetite for snapping up residential HVAC companies today may not be as big as it was during the Covid-era frenzy of a few years ago — but it’s still healthy, notes M&A vet Fred Silberstein.

What’s happening: Silberstein, chief executive of HVAC-focused M&A firm SF&P Advisors, which has facilitated nearly $250 million in contractor acquisitions since January, chatted with Homepros about the state of the M&A market from his vantage point.

• The following has been lightly edited for brevity and clarity. 

How would you describe buyer demand today?

“There are [private equity-backed platforms] that, one year, are more inquisitive and looking to do deals, and then all of a sudden, a year goes by and they don’t sign anything. Not all of them are active buyers today — some come in and out — but some are.”

What about EBITDA multiples?

“I’d say multiples have stayed, or they’re not markedly different over the last couple years, based on our transactions. There have been a couple outliers, but 2025 to 2024 on a multiple basis, I’d say there’s consistency.”

Something you’re watching, macro-wise?

“One thing that could help is lower interest rates, because the cost of capital goes down. So it helps buyers with their borrowing costs, and it helps sellers because, theoretically, with cheaper financing, they should be able to sell more replacements.”

In your opinion, will we see major consolidation play out at the private equity level itself?

“You’d have to say to somebody, ‘Hey, we can both get a lot bigger and have more mass and benefits and everything,’ but somebody’s got to trade stock and control for stock and no control. That’s a tough trade.”

• “But I think it has to happen. If you ask me, ‘In five years, will there be 50 PE-backed strategics?’ I don’t think so. But until someone goes public and has the cash that comes with being in a public setting, who gives up the decision-making? That’s why I think we haven’t seen it yet.”

Can you elaborate on the IPO point?

“The industry still needs to figure out when and who goes public, and then how receptive the public markets are to these businesses. I’m still optimistic that when that happens, we’ll go through, I’ll call it, an even bigger ‘third gold rush.’”

• “The first one happened in the late 90s, early 2000s, and the second happened four or five years ago. I don’t think we’re waiting 15 years for the third one.” 
• “Whoever goes public has to do well in that environment, but if that happens, imitation is the sincerest form of flattery, and I think you’ll see others go public.”

What else is bubbling?

“Don’t sleep on commercial. One commercial deal was the best process we’ve done this year — the most interest, valuation exceeding expectations. I think there’s a lot to be said about what’s happening.”

• “Go look at Comfort Systems’ stock price over the past five years, compared to Amazon and Google.” 
• [As of August 21, Comfort Systems’ share price had appreciated by more than 1,200 percent over the past five years, while Amazon and Google’s had grown about 35 and 150 percent, respectively.]
• “Everyone likes residential more, but it’s pretty impressive what they’ve done. People used to say, ‘PE can’t do commercial.’ They don’t say that anymore.”