The HVAC industry continues to demonstrate strong fundamentals and attract investor attention. As previously noted, CapIQ reported 138 announced or completed deals in 2024. This compares to 60 announced or completed deals in the first half of 2025, reflecting steady deal activity. Investors remain drawn to the sector’s recurring revenue, essential nature, and regulatory tailwinds.
Evolving Investor Strategies
From 2019 through 2023, HVAC M&A activity focused on platform creation, as private equity firms established initial footholds in space. During that period, valuation multiples for commercial HVAC companies with $50+ million of revenue averaged approximately 9x EBITDA, with larger companies commanding premium pricing. Today, the range of multiples has grown to between 7x and 11x EBITDA, with buyers willing to pay more for scale and quality. With many platforms now built, activity has shifted toward add-on acquisitions and regional density rather than new platform formation.
Strategic buyers dominate the landscape, accounting for 80% of HVAC service transactions in the first half of 2025, an increase of roughly 25% over the past year. This includes corporate buyers owned by private equity firms. Their focus has evolved into operational integration, regional expansion, and cross-service synergies.
Many established platforms are also expanding horizontally into related service lines such as plumbing, electrical, and controls. Only larger, well-managed firms have found consistent success in these strategies, as true cross-selling across service lines remains challenging. At the same time, smaller but high-quality HVAC firms in secondary and tertiary markets continue to attract attention, particularly from buyers seeking geographic reach and workforce capacity.
Valuations remain healthy, but buyers are more selective. Strategic fit and operational efficiency are paramount. For sellers, preparation and clean financial reporting have never been more important.
Industry Headwinds
Tariffs and Inflation Cost
The reintroduction of tariffs on imported steel, aluminum, and HVAC components in 2024 increased equipment costs by 8-12% year-over-year, according to the U.S. Bureau of Labor Statistics Producer Price Index. Many service providers have been unable to fully pass along these increases, pressuring margins and working capital. Supply constraints from offshore manufacturers have compounded the issue of inflating project costs and delaying installations.
Labor Shortages
The HVAC industry continues to face a significant labor shortage. In 2025, there are an estimated 110,000 unfilled technician positions, and roughly 23,000 technicians exit the industry annually. This could result in a deficit of 225,000 technicians within five years. The U.S. Bureau of Labor Statistics projects 8% employment growth for HVAC mechanics and installers from 2024 to 2034, faster than average across all occupations. This imbalance raises operational costs and complicates integration for acquirers.
Smart Building Technology and IoT
Smart building technologies are transforming the HVAC sector. Modern systems use sensors, cloud connectivity, and AI to optimize performance, reduce downtime, and improve energy efficiency. Buyers increasingly target companies that have embraced these innovations.
- IoT Integration enables real-time performance monitoring and optimization.
- Building Automation Systems (BMS) allow HVAC units to adjust dynamically to occupancy, weather, and energy pricing.
- AI-Driven Predictive Maintenance leverages data analytics to forecast issues and schedule service proactively.
The rise of smart HVAC solutions has intensified competition among buyers and boosted valuations, especially for tech-enabled firms with recurring service revenues.
Preparing for a Sale
For HVAC business owners considering an exit, early preparation can improve outcomes and valuation.
Action steps:
- Strengthening management depth and succession planning.
- Diversify revenue through service agreements and building automation.
- Document compliance and sustainability efforts.
- Review supplier relationships and address tariff exposure.
Outlook
Despite headwinds from tariffs and labor shortages, HVAC M&A activity remains strong. Consolidation will continue as buyers seek scale, efficiency, and geographic reach. Well-managed, service-oriented businesses with recurring revenue and capable leadership can expect strong valuations depending on size, growth, and location.
For owners contemplating a sale, now is an opportune time to evaluate strategic options and position the business for future success.
Brooks Crankshaw is a Managing Director at Forbes Partners in Denver, Colorado. He advises owners of commercial business services companies-including HVAC, plumbing, electrical, and facilities services-on selling their business, raising capital, or growing through acquisition.