Commercial HVAC Roll-Up Economics: Multiple Arbitrage Drives Returns

The core return driver in HVAC buy-and-build strategies is multiple arbitrage: buying tuck-in contractors at 5-8x EBITDA and exiting the combined platform at 15-20x EBITDA. With over 29,000 private commercial HVAC service companies in North America, most owner-operated with no succession plan, the fragmentation creates a buyer's market for well-capitalized platforms.

“Partners Group buys tuck-in contractors at 5 to 8x EBITDA. A regional HVAC operator doing $3 million in EBITDA might sell for $18 to $24 million. Once that business is folded into a $200 million-plus EBITDA platform with diversified geography, blue-chip customers, and contracted revenue, the combined entity commands a platform multiple of 15 to 20x.”

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