PE consolidation thesis: HVAC fragmentation drives roll-up

A CEO Warrior/Citizens Bank session explains the PE roll-up thesis in HVAC: investors target the essential, fragmented HVAC market to bundle contractors, strip cost, and build value, since no single firm holds a dominant share.

“The second reason is the fragmentation of the industry because private equity likes to consolidate. Unlike pest control, where a company like Orkin has a lion’s share of the business, there is not an HVAC company that has a similar market share. The thought process of private equity is to bundle contractors together, strip cost by combining resources, and improve capability, which leads to more value.”

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