The Money Leaves Town

When the best HVAC company in your town is owned by the family that built it, the profit it earns has a short journey. It pays the owner, who lives down the road. It pays the technicians, who coach Little League and shop at the hardware store. The owner’s profit gets spent, saved, or reinvested, mostly nearby, because that’s where the owner lives. The money stays in circulation in the place that generated it.

When a private-equity fund owns that same company, the journey is longer. The technicians are still local and still paid. But the profit (the margin left after wages and costs) no longer stops in town. It flows up the ownership chain to the fund, and from the fund to its investors: pension systems, endowments, sovereign wealth funds, and wealthy individuals, who are overwhelmingly somewhere else. The work happens on your street. The return on it lands on Wall Street, or further.

That’s the argument of this post: a claim about where the money goes. The counter-argument, that those same deals also make local people rich, is real and strong, and we’ll give it its due.

The theory: an economy that “buys up the local”

By “extraction” we mean something specific and economic, not a moral or criminal charge: profit earned in a local market is distributed to owners somewhere else, so the margin flows out of the local economy to a distant fund rather than circulating where it was generated. The idea that private equity extracts value from communities in that sense, rather than merely operating within them, is the subject of a recent Cambridge University Press study by economists Maryann Feldman and Martin Kenney, pointedly titled Private Equity and the Demise of the Local. Their thesis: private equity has “moved from restructuring industrial firms to buying up just about any economic activity in local communities that has assets that can be monetized, without any consideration of the impact on the quality of life and well-being of the community.”¹ This is a scholarly theory about how the private-equity model interacts with local economies, not a measured finding about any particular HVAC deal or town.

The mechanism they describe is familiar from the rest of this series: a fund buys a local business, loads it with debt, optimizes it for resale, and harvests the returns for distant investors. Brendan Ballou, the former federal prosecutor who has become the most prominent critic of PE in the trades, puts the local consequence directly: skilled trades historically “let people build wealth locally, your town’s best technician could build a thriving business,” but “with private equity rollups, profits are siphoned off to investors hundreds or thousands of miles away.”²

Our data: how far away “away” actually is

This is where our ownership graph adds something the theory can’t: we can name the distant addresses.³ Trace a few “local” HVAC brands up their ownership chains and here is where they end:

• Sila Services (a platform behind local comfort brands across the Northeast and beyond) is majority-owned by Goldman Sachs Alternatives, headquartered in New York, which agreed to buy Sila from Morgan Stanley Capital Partners, as announced by the parties.⁴
• Apex Service Partners (one of the largest home-services platforms in the country) took a strategic minority investment from Apollo Global Management (New York), as announced by the parties in May 2026.⁵ The investment was reported in the trade press at around $2 billion, at roughly a $10 billion valuation (the parties did not disclose financial terms).⁶
• Reedy Industries (a long-established commercial HVAC company) traces up to Partners Group, an investment manager headquartered in Baar, Switzerland, which announced its agreement to acquire Reedy.⁷ For Reedy’s customers, the profit doesn’t just leave the state. It leaves the country.

And the geography of the work makes the distance vivid. In our data, the HVAC contractors with a known location cluster where the heat and the growth are: Texas (69), Florida (59), Ontario (48), California (41), Ohio (40)³: Sun Belt service territories and a big Canadian metro. The capital that owns them sits in New York, in Switzerland, in the financial centers. The map of where the air conditioners get fixed and the map of where the profit comes to rest are not the same map.

The local-multiplier argument

Economists have long argued that a dollar of revenue at a locally-owned business recirculates more within the regional economy than a dollar at an absentee-owned one: the local owner banks locally, hires local accountants and lawyers, and spends profit nearby, while a remote owner repatriates the margin. This is the “local multiplier” idea, and it is the economic engine beneath the extraction argument.

So the claim is narrow: there is a well-established economic argument that local ownership keeps more money circulating locally, and the PE model, by routing profit to distant investors, works against it. The evidence behind the local-multiplier idea comes mainly from retail-storefront studies (a looser analogue than home services), and it has not been measured for HVAC specifically. It’s a direction, not a measured size.

The counter-argument that actually lands

Here is where the extraction story has to slow down and concede, because the strongest objection is not a quibble. It’s a genuinely good outcome.

Private equity mints local millionaires. The founder who spent thirty years building a contracting business and sells it to a roll-up gets a life-changing check, and that founder usually is local. That money lands in the community: it buys homes, funds the next local business, pays local taxes on the gain, gets donated to the local church or booster club. A founder’s liquidity event is real local wealth creation, and it happens precisely because a distant fund showed up willing to pay a premium no local buyer could match. For the seller, the arrival of PE is often the best financial day of their life.

And the ongoing local activity doesn’t stop. The technicians keep their jobs and their paychecks, which still get spent in town. Local payroll, local taxes on operations, local spending by employees: all of it continues under PE ownership. The roll-up doesn’t empty the town of economic activity. It changes who collects the profit on top of that activity.

What it means

The distribution question is the real one, and it’s a trade the seller makes but the community never votes on. A founder’s sale converts decades of a local profit stream into a single local windfall (good for the founder) while sending every future year’s margin out of town. Whether that’s a good deal for the community depends on something we can’t measure: whether the one-time injection outweighs the permanent redirection. Reasonable people land in different places on that.

For local officials and economists, the takeaway is that the question is worth actually studying. We can show that the ownership endpoints are demonstrably distant (New York, Switzerland) and that the service territories are demonstrably local. What no one has measured is the net effect on any particular regional economy. That study would be worth doing, and our data could seed it.

For a homeowner, this is the least actionable post in the series: you can’t fix macroeconomics by choosing a contractor. But it reframes the “support local” instinct with a fact (that the friendly local brand may function economically as a channel sending part of the margin to a distant fund) and leaves the weighing to you.

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The bottom line. When a fund owns your local HVAC company, the work stays local and the profit doesn’t: our data can trace “local” brands to owners in New York and Switzerland, while the service trucks run in Texas, Florida, and Ohio. That’s profit extraction, and there’s a serious scholarly argument it weakens local economies. But the same deals also write life-changing checks to local founders and keep local payrolls running. So this isn’t “PE robs your town.” It’s a quieter, truer claim: the roll-up trades a one-time local windfall for a permanent change in where the money ends up. The trade might be worth it. The community just never got asked.

Sources

1. Maryann Feldman & Martin Kenney, Private Equity and the Demise of the Local (Cambridge University Press, Cambridge Elements). Tier 1, scholarly argument/theory. https://www.cambridge.org/core/books/private-equity-and-the-demise-of-the-local/CC69ECF028D3556E7510092EC080838B ↩

2. “Plunder: How Private Equity Is Reshaping HVAC,” Heat Pumped (interview with Brendan Ballou), heatpumped.org. Tier 2 (expert interview). https://www.heatpumped.org/p/plunder-how-private-equity-is-reshaping-hvac ↩

3. Our figures come from the hvacrollups ownership graph: a curated, evidence-gated record, not a census, so the counts are a floor on the scale of consolidation. See our methodology and legal disclaimers. ↩ ↩²

4. “Morgan Stanley Capital Partners Agrees to Sell Sila Services,” Morgan Stanley press release, November 2024 (sale to Goldman Sachs Alternatives). https://www.morganstanley.com/press-releases/morgan-stanley-capital-partners-agrees-to-sell-sila-services Confirmed independently by Robert W. Baird & Co. (financial advisor to Sila): https://www.rwbaird.com/transactions/investment-banking/dealcard/6435/ ↩

5. “Apex Service Partners and Alpine Investors Announce Strategic Minority Investment from Apollo Funds in Apex,” Apollo Global Management press release, May 28, 2026. (Financial terms not disclosed by the parties.) https://www.apollo.com/insights-news/pressreleases/2026/05/apex-service-partners-and-alpine-investors-announce-strategic-mi ↩

6. The ~$2 billion investment / ~$10 billion valuation is as reported by the trade and financial press; the parties did not disclose financial terms. See, e.g., “Apex Service Partners Nears Minority Stake Sale at $10 Billion Valuation, Source Says,” Reuters/U.S. News, May 27, 2026. https://money.usnews.com/investing/news/articles/2026-05-27/apex-service-partners-nears-minority-stake-sale-at-10-billion-valuation-source-says ↩

7. “Partners Group has signed a definitive agreement to acquire Reedy Industries, a leading provider of commercial HVAC services,” Partners Group investment news, July 2021 (Partners Group has regional headquarters in Baar-Zug, Switzerland). https://www.partnersgroup.com/news-and-views/press-releases/investment-news/detail?news_id=95f46d6d-ac04-4128-9289-dc2736a81dd3 ↩

8. Contractor describing a PE aggregator price book, public YouTube video, 2024–2026. (Individual on-the-record account.) https://www.youtube.com/watch?v=wWt4Z9Pwf_E ↩

9. Public YouTube commentary on post-acquisition pricing. https://www.youtube.com/watch?v=pUnfb2A32mg ↩

10. Paraphrased from public discussion on Reddit and social platforms surfaced in our HVAC content corpus (2024–2026). Individual accounts, anonymized and not independently verified; presented as lived-experience sentiment, not as factual claims about any named company. ↩