Growth Through Acquisition: The Buy-and-Build Strategy

Private equity firms have figured something out that most trade business owners haven’t: growth through acquisition is the fastest path to a $10M+ company — not organic growth.

While you’re grinding to add one truck at a time, PE-backed competitors are buying entire companies. They’re acquiring your competitors, their customer lists, their technicians, and their territories. In 18 months, they’ve built what would take you a decade.

Here’s the thing: there’s nothing stopping you from doing the same thing.

Why PE Loves the “Buy-and-Build” Strategy

The numbers are staggering. In 2025 alone, private equity announced 77 major acquisitions in HVAC. The industry is consolidating at an unprecedented pace because the math works beautifully:

The Arbitrage: A small HVAC company with $500K in profit might sell for 3x earnings ($1.5M). But a larger platform with $5M in profit commands 8-10x earnings ($40-50M). Buy ten small companies, integrate them into one platform, and you’ve created tens of millions in value without improving a single operation.

The Playbook:

1. Acquire a “platform” company — usually $2-5M revenue with solid operations
2. Add 10-30 “tuck-in” acquisitions over 3-5 years
3. Integrate operations, marketing, and back-office
4. Sell the combined platform for a massive multiple

PE firms aren’t smarter than you. They just have a playbook you haven’t been taught.

Until now.

The Two Paths: Prey or Predator

You have two choices in this market:

Path 1: Wait to Be Acquired

You clean up your books, maximize your EBITDA, and wait for a PE firm to make you an offer. You might get 4-6x your profit. It’s a good outcome — but you’re capturing a fraction of the value you built.

Path 2: Do What PE Does

You become the acquirer. You buy competitors, expand into new territories, add service lines, and build the platform yourself. When you eventually exit, you capture the full multiple — not just the small company discount.

Most owners default to Path 1 because Path 2 seems complicated. It’s not. It just requires understanding the process.

Types of Acquisitions

Not all acquisitions are the same. Understanding the types helps you identify opportunities:

Horizontal Acquisition (Same Services, New Territory)

You buy another HVAC company in an adjacent market. Same services, new customers, new territory.

Why it works:

• Immediate geographic expansion
• Shared marketing and brand leverage
• Consolidated purchasing power
• Cross-referral between locations

Example: You’re strong in the north side of your city. You acquire a competitor on the south side. Overnight, you have city-wide coverage.

Vertical Acquisition (Different Services, Same Customers)

You buy a plumbing or electrical company that serves the same customer base.

Why it works:

• Cross-sell to existing customers
• Single point of contact for homeowners
• Higher lifetime value per customer
• Reduced customer acquisition costs

Example: Your HVAC customers also need plumbing. Instead of referring them out, you acquire a plumber and capture that revenue.

Tuck-In Acquisition (Absorbing Competitors)

You buy a smaller competitor and fold them into your existing operation — their customers, equipment, and sometimes staff, but not their brand or location.

Why it works:

• Fastest integration
• Immediate capacity and revenue
• Eliminates a competitor
• Often the cheapest deals (retiring owners, burned-out operators)

Example: A local competitor’s owner is retiring. You buy their customer list and equipment for 1.5x profit, integrate the customers, and add $200K in annual revenue.

Platform Building (The PE Model)

You build a holding company that owns multiple brands or locations, each with some autonomy but shared back-office, marketing, and systems.

Why it works:

• Maintains local brand equity
• Scalable management structure
• Attracts investment capital
• Highest exit multiples

Example: You own “Smith HVAC” and acquire “Jones Plumbing” and “City Electric.” Each keeps its brand, but you share office staff, dispatch, and marketing.

Prerequisites: Are You Ready to Acquire?

Before you start shopping for companies, you need certain things in place. Skip these and you’ll struggle:

1. A Management Team (Not Just You)

If you’re still the primary technician, salesperson, and manager, you can’t run an acquisition process and integrate a new company. You need at least one leader who can manage operations while you focus on the deal.

2. Documented Systems

Your way of doing things needs to be written down. When you acquire a company, you’re going to standardize operations. If your systems exist only in your head, integration will be chaos.

Key systems to document:

• Hiring and onboarding
• Dispatch and scheduling
• Pricing and estimating
• Accounts receivable and collections
• Customer service standards

3. Clean Financials

You’ll need financing for most acquisitions. Lenders want to see your track record. Clean books, consistent profitability, and professional financial statements are non-negotiable.

4. Capital or Financing Capacity

Acquisitions require capital. You’ll need:

• 10-20% down payment (SBA loans)
• Working capital for integration
• Buffer for unexpected costs

If you don’t have cash, you’ll need lender relationships or seller financing arrangements.

5. Integration Capacity

Buying a company is the easy part. Integrating it is where most acquisitions fail. You need bandwidth to:

• Onboard new employees
• Convert customers to your systems
• Handle the inevitable problems
• Maintain your existing business

How to Find Acquisition Targets

Good deals don’t appear on business-for-sale websites. Here’s where to actually find them:

Direct Outreach

The best acquisitions are companies that aren’t for sale — until you ask. Identify competitors you’d want to own and reach out directly:

“I’ve admired what you’ve built with ABC Plumbing. I’m exploring growth opportunities and wondered if you’d ever consider a partnership or sale. No pressure — just curious if it’s something you’d discuss over coffee.”

Most won’t respond. Some will. The ones who do are often the best deals because there’s no broker inflating expectations.

Industry Networks

HVAC and plumbing associations, distributor relationships, and supplier networks know who’s struggling, retiring, or looking to exit. Let your contacts know you’re in the market.

Business Brokers

Brokers list companies for sale and take a commission (typically 10%). The deals are more competitive, but brokers handle much of the process. Good for your first acquisition.

Distressed Situations

Owners who are burned out, dealing with health issues, or have partnership disputes often sell quickly and cheaply. These deals require fast action but offer the best prices.

Succession Gaps

The average HVAC company owner is over 55. Many have no succession plan. Approaching owners 5-10 years from retirement — before they’re ready to sell — lets you build relationships and get first look at deals.

Evaluating a Target: The Due Diligence Checklist

Once you find a potential acquisition, you need to evaluate it thoroughly. Here’s what to examine:

Financial Health

Customer Base

Operations

The Real Question

Beyond the checklist, ask yourself: Why is this owner selling?

Acceptable reasons:

• Retirement
• Health issues
• Partnership dissolution
• Desire to cash out and move on

Red flags:

• Vague answers (“time for something new”)
• Market changes they’re not sharing
• Key customer or employee departures
• Pending problems they want to escape

Financing Your Acquisition

Most trade business acquisitions are financed, not cash purchases. Here are your options:

SBA 7(a) Loans

The most common financing for acquisitions under $5M:

• 10-20% down payment required
• 10-year terms typical
• Competitive rates (Prime + 2-3%)
• Requires business experience and solid financials
• Personal guarantee required

Seller Financing

The seller agrees to receive part of the purchase price over time:

• Shows seller confidence in the business
• Reduces your upfront capital needs
• Aligns seller interest with your success
• Often combined with bank financing

Example structure: 70% SBA loan, 20% seller note, 10% your equity.

Earn-Outs

Part of the purchase price is tied to future performance:

• Reduces your risk
• Aligns incentives
• Useful when valuations disagree
• Complex to structure and track

Equity Partners

Bring in a partner (or small investor group) to fund the acquisition:

• Preserves your cash
• Shares the risk
• Dilutes your ownership
• Adds complexity and potential conflict

The Integration Playbook

This is where most acquisitions fail. Integration is harder than the deal itself.

Day 1: Communicate Clearly

Employees are scared. Customers are uncertain. Your first job is reassurance:

To employees: “Nothing changes immediately. Your jobs are secure. We’re here to grow, not to cut. I’ll meet with each of you this week.”

To customers: “You may have heard ABC Plumbing joined our family. Same great technicians, same service quality, now with more resources behind us. Nothing changes except we can serve you even better.”

Week 1-4: Assess Everything

Don’t make changes until you understand the reality:

• Meet every employee individually
• Review every customer account
• Understand their systems and processes
• Identify quick wins and hidden problems

Month 1-3: Standardize Operations

Move to unified systems:

• Accounting and payroll
• Dispatch and scheduling
• Pricing and invoicing
• Customer communication

The goal: every location runs the same way, enabling real economies of scale.

Month 3-6: Optimize

Now you can improve:

• Cross-sell services to acquired customers
• Consolidate purchasing for better pricing
• Implement your marketing across both brands
• Identify and address operational gaps

Common Integration Mistakes

Moving too fast: Changing everything in week one creates chaos. People need time to adjust.

Ignoring culture: Their way of doing things isn’t wrong — it’s just different. Respect what worked while standardizing what matters.

Losing key people: The technicians and office staff know the customers. Losing them means losing institutional knowledge and customer relationships.

Neglecting your base business: Your existing operations can’t suffer while you integrate. Balance is critical.

Your First Acquisition: Start Small

Don’t start with a company as big as yours. Your first acquisition should be:

• 1/3 to 1/2 your current size
• In your existing market (geography you know)
• Similar services (reduces complexity)
• Owner willing to help with transition

This “training wheels” approach lets you learn the process with lower stakes. Your second and third acquisitions can be larger and more complex.

The Math That Changes Everything

Let’s run the numbers on a realistic scenario:

Current state:

• Your company: $2M revenue, $300K profit
• Value at 4x: $1.2M

After two acquisitions over 3 years:

• Combined revenue: $4M
• Combined profit: $600K (after synergies)
• Value at 6x: $3.6M

You’ve tripled your company’s value — not through grinding out organic growth, but through strategic acquisition.

And this is the small version. PE firms do this at scale, turning $10M platforms into $100M empires.

The Decision: Build or Be Built Upon

The consolidation wave in home services isn’t slowing down. Every month, another PE-backed competitor gets bigger while independent contractors stay the same size.

You have a choice:

Stay independent and compete against increasingly well-funded competitors. This works if you’re excellent at what you do and don’t care about growth. It’s a lifestyle business, and there’s nothing wrong with that.

Become an acquirer. Use the same playbook PE uses. Build something bigger. Create real wealth. Exit on your terms, at your timeline, for the full platform multiple.

The tools are the same. The strategy is the same. The only difference is whether you’re the one executing it — or the one being acquired.

Action Items

If you’re ready to explore growth through acquisition:

1. Assess your readiness: Do you have the management team, systems, and capital capacity?
2. Define your criteria: What type of acquisition makes sense? Geographic? Service expansion? Tuck-in?
3. Start networking: Let your industry contacts know you’re interested in acquisitions
4. Build lender relationships: Talk to SBA lenders before you need them
5. Identify 10 targets: Make a list of companies you’d want to own and research them

The companies that will dominate home services in ten years are being built right now. The question is: will you be one of them?