Selling your HVAC business to private equity

Where private equity stands in HVAC (2026)

HVAC has become one of the most active roll-up markets in the trades. Private equity firms buy a strong regional company, call it a platform, and then bolt smaller companies onto it, called add-ons, to build a larger business they can sell again in five to seven years. The pace has been fast. Private equity's share of HVAC deals rose from 8 percent in 2023 to 23 percent in 2024. Named platforms buying in the space include Apex Service Partners, Wrench Group, and Sila Services, each of which has combined many independent owners under one roof.

The reason HVAC draws so much money is simple. Heating and cooling break down, replacement is not optional, and a well-run shop earns steady revenue from maintenance agreements year after year. That recurring, non-deferrable demand is exactly what a roll-up is built to gather. For an owner near retirement, this means real buyers with real capital, but it also means the person across the table is a professional acquirer who has done this many times, while for most owners it is the first and only time.

What is my HVAC business worth?

Value in a private equity deal starts from EBITDA, which is your earnings before interest, taxes, depreciation, and amortization, adjusted for owner pay and one-time costs. The buyer applies a multiple to that number. In 2026, reported ranges are roughly 3.0 to 5.5 times EBITDA for a smaller company bought as an add-on, and roughly 7.0 to 10 times for a larger company bought as a platform. These are ranges other sellers have reported, not an offer to you, and the gap between the two is mostly about size and quality, not luck.

A few things move you toward the top of the range, and they are worth understanding before you go to market.

• Recurring service agreements and membership plans. Predictable maintenance revenue is worth more than one-off installs, because a buyer can count on it.
• A residential service mix rather than new construction. Service and replacement work is steadier and higher margin than chasing new-build projects, and buyers pay up for it.
• Fleet condition and technician retention. A platform is buying capacity, and trained technicians who stay are harder to replace than trucks.
• Clean books. Reviewed financials, clear job costing, and separated personal expenses shorten diligence and reduce the price cuts that surface late in a deal.

The valuation page explains EBITDA add-backs and the working capital peg in more detail, and the calculator turns a headline multiple into an after-tax number.

How the deal is usually structured

The headline price is enterprise value, not the check you receive. A typical HVAC deal splits that value into parts. Around 60 to 70 percent is paid in cash at close. A rollover stake, usually near 20 percent though it can range wider, is taken as equity in the buyer's holding company instead of cash. Another 5 to 10 percent is held in escrow for a year or more to cover any problems found after closing. On top of that sits a working capital peg, a required level of receivables and other working capital you must leave in the business, which can pull the final number down if you run lean.

On deals above roughly $10 million of enterprise value, representations and warranties insurance is common, which shifts some deal risk from you to an insurer. Earnouts, where part of the price depends on hitting future targets, are common in agency deals but rare in the trades, so most HVAC sellers do not carry one. The deal terms glossary defines each of these, and rollover equity covers the part that stays at risk.

How you will be taxed

Most of your price is goodwill, and goodwill is taxed as long-term capital gain, 20 percent federal plus your state's rate. That is the good news. The part owners underestimate is depreciation recapture. If you wrote off trucks, tools, and equipment using bonus depreciation or Section 179, the gain on those assets up to the amount you deducted is taxed as ordinary income under Section 1245, at up to 37 percent, and it is recognized in the year of sale. For an HVAC business with a fleet of service trucks and a shop full of equipment, this ordinary-income slice is larger than it is for most sellers, so it deserves attention before you sign, not after.

A covenant not to compete is also ordinary income to you, and consulting or transition pay is ordinary income plus payroll tax. The split between capital gain and ordinary income is set by the purchase price allocation in the contract, and the buyer is often indifferent to it while it costs you real money, so it is worth negotiating. The full mechanics, including the allocation form and the rollover's deferred tax, are on the how a sale is taxed page.

QSBS deserves an honest word here. Section 1202 can exclude a large amount of federal gain, but only if your company was a C corporation when the stock was issued and for long enough after. The trades are not on the list of excluded fields, so an HVAC company generally can qualify if it is a C corporation. The problem is that most HVAC businesses are S corporations or LLCs, and those hold no QSBS at all. So for most sellers the real question is whether a C-corp conversion happened years before the sale. It is fact-specific and needs a written CPA opinion. Do not assume it applies. The QSBS page walks through the two gates.

What changes after you sell

The day after closing, two things are true at once. You have a cash check, and you no longer own your company. Most platforms want you to keep running the business for a period, often two to three years, but as an employee working inside their system. Pricing, purchasing, software, hiring rules, and back office usually move to the platform's way of doing things. For an owner used to deciding everything, that loss of control is the hardest adjustment, harder than the money, and it is the part sellers most often underestimate.

Your income changes shape too. The salary and distributions the business paid you stop, replaced by a platform salary that is usually smaller, and by whatever the rollover pays someday. That rollover is a minority stake in a private, leveraged company you no longer control. It may be worth more at the next sale or it may be worth nothing, so the right way to plan is to build your household around the cash you kept and treat any rollover payout as a bonus. The after-sale plan and managing rollover equity pages cover the money side of this new life.

Who should not sell right now

Selling to a platform is not right for everyone, and it is worth being honest about that before an offer pulls you along.

• If your business still depends heavily on you personally, and you have not built a team that runs service without you, waiting a couple of years to fix that can raise your multiple more than the deal in front of you is worth.
• If your revenue is mostly new construction rather than recurring residential service, you may get a stronger price after shifting the mix, because that shift is exactly what buyers pay up for.
• If you cannot picture yourself taking direction inside someone else's system for two to three years, the earnout-free cash may not be worth the working conditions, and a slower sale to a family member or key employee may fit you better.
• If you would owe heavy depreciation recapture and have no plan for the tax, closing before you understand the ordinary-income slice can cost you more than a few months of preparation would.

What to do next

1. Get your numbers clean first

   Reviewed financials, clear job costing, personal expenses separated, and a real picture of recurring maintenance revenue. This is what lifts the multiple and shortens diligence, and it is worth doing before any conversation with a buyer.

2. Model the after-tax number, not the headline

   Run your expected multiple through the calculator, and pay attention to the depreciation recapture on your fleet and equipment, because that ordinary-income piece is larger for HVAC than most sellers expect.

3. Check the two QSBS gates early

   Ask your CPA whether the company is or ever was a C corporation, and get a written answer. If it always was an S corporation or LLC, set QSBS aside and focus on the allocation, the structure, and the after-sale plan. See QSBS.

4. Plan the money before the check lands

   Decide how the cash will replace your income and how you will treat the rollover, using the after-sale plan. When you want a second set of eyes, the contact page explains how a first conversation works, including when we will tell you that you do not need us.