Multiple arbitrage engine behind HVAC roll-ups

Small residential HVAC shops trade at 6-9x EBITDA while scaled platforms sell at 17-20x; PE buys at ~7x, centralizes the back office, grows profit, and resells the platform at ~18x. The spread is the entire return, drawing PE to a fragmented, cash-generating, recession-resistant trade with retirement-age ownership.

“A small residential HVAC shop trades around 6 to 9 times earnings (EBITDA, a rough proxy for operating profit). A scaled platform sells at 17 to 20 times. So a firm buys your shop at 7 times, centralizes the back office, grows the profit, and resells the platform at 18 times. That spread is the entire return. It is why PE wants a fragmented, cash-generating, recession-resistant trade with a retirement-age ownership base. HVAC checks every box.”

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