PE roll-up engine explained: buy at 6-9x, sell platform at 17-20x EBITDA

The article explains the PE roll-up model: a small residential HVAC shop trades around 6 to 9 times EBITDA, while a scaled platform sells at 17 to 20 times. PE buys shops at lower multiples, centralizes operations, grows profit, and resells the platform at a higher multiple.

“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.”

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