PEG roll-up playbook in plumbing and HVAC: valuation arbitrage and consolidation

M&A advisors describe how PEGs acquire plumbing and HVAC companies at one valuation to sell at 2-3x in three to five years by packaging companies, improving efficiencies, and consolidating backroom operations—often resulting in loss of local decision-making and autonomy.

“"PEGs want to buy companies at a valuation X and sell them for two to three times that in three to five years," said Hyman. "They do this by packaging the companies together, improving efficiencies and reducing costs, which usually involves the consolidation of the backroom operations of many small companies, resulting in the loss of local decision-making and autonomy."”

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