Still a Buyer’s Market? What 2026 Interest Rates and PE Consolidation Mean for Home Services Sellers

I spent years on the buy side of home services M&A, including time at Apex Service Partners while it was rolling up hundreds of HVAC, plumbing, and electrical companies. So when an owner tells me a broker promised him “PE firms are throwing money at everyone right now,” I wince. That was true in 2021. It is not how 2026 works.

The market today is more interesting and more uneven than either the boom-era story or the doom-era story. Rates came down from their peak, but they settled well above the near-zero world that fueled the original feeding frenzy. The big consolidators are still buying, but they have hundreds of acquisitions behind them and have gotten noticeably pickier about what they pay up for. The result is a bifurcated market: a genuine buyer’s market for average companies, and a surprisingly competitive market for clean, well-run ones. Which side of that line you land on is largely within your control.

Where Interest Rates Actually Sit in Mid-2026

Let’s get the rate picture right, because most of the content written for owners is stale. The Federal Reserve cut rates through 2025, and the federal funds target range has sat at 3.50%–3.75% since December 2025 — the Fed has held it there through its 2026 meetings while inflation stays stickier than it would like. The prime rate is 6.75%.

That matters in two specific ways for sellers:

For leveraged institutional buyers, borrowing costs are meaningfully lower than the 2023–2024 peak, but still roughly triple the cost of money in 2021. Acquisition debt for sponsor-backed platforms generally prices off floating benchmarks plus a healthy spread, so all-in costs commonly land in the high single digits.

For individual and search-fund buyers — the people most likely to buy a sub-$1M EBITDA shop — SBA 7(a) loans are the financing backbone, and variable 7(a) rates currently run roughly 9%–11.5% depending on loan size and lender markup over prime. Strong borrowers see something near 9%–9.5%.

The Debt Math That Sets Your Price

Buyers don’t start with what your company is worth. They start with what the debt service allows them to pay. Walk through it conservatively.

Say a platform buys a $2M EBITDA plumbing company at 5.5x — an $11M price — financed half with debt. That’s $5.5M of borrowing. At a 9.5% all-in cost, interest alone runs about $522,000 a year, roughly 26% of EBITDA before any principal amortization, capex, or integration spend. Run the same structure at the 2021-era cost of debt — call it 5.5% all-in — and interest is about $303,000, or 15% of EBITDA. That gap is most of the reason multiples compressed from the boom-era highs and haven’t fully returned even after the Fed’s cuts.

At the small end it bites harder. A buyer using a $1.4M SBA note at around 10% on a 10-year amortization is signing up for roughly $220,000 a year in debt service. If the business produces $500K of true earnings, almost half is gone before the new owner pays themselves. That is why smaller shops trade at lower multiples regardless of how good the story is — the financing math simply caps the price.

Consolidation Grew Up — and Buyers Got Pickier

The other half of the story is maturity. The major platforms are no longer scrappy roll-ups proving a thesis; they’re large operating companies with investment committees and integration scar tissue. Apex Service Partners alone reportedly completed on the order of 60 add-on acquisitions in 2025 and took a $2B investment from Apollo Global Management. Wrench Group operates dozens of brands across more than two dozen markets. Sila Services traded to Goldman Sachs Alternatives in late 2024 at a reported valuation around $1.7B. TurnPoint Services, under OMERS Private Equity, has grown roughly tenfold since 2020 through add-ons. Heartland Home Services has stacked up well over a dozen acquisitions in the Midwest.

When a platform has already bought 50 or 300 companies, it knows exactly what a bad acquisition costs. So add-on criteria have hardened. The platforms I know look for specific market density, residential service and replacement revenue, technician headcount that survives a transition, and financials they can diligence quickly. Companies that miss those criteria don’t get a lower offer — increasingly, they get no offer. Meanwhile deal activity in residential HVAC and home services remains strong; the volume just concentrates on the targets that fit. That’s the flight to quality, and it’s the defining feature of this market.

What Makes a Company Attractive Right Now

Clean accrual financials

This is the first filter, and it kills more deals than price does. Cash-basis books with deferred revenue ignored, inventory unaccounted for, and personal expenses scattered through the P&L force a buyer to rebuild your numbers from scratch — and every adjustment they make goes against you. Two to three years of accrual-basis financials with a consistent monthly close is the cheapest valuation upgrade available.

Margin quality, not just margin size

Buyers in 2026 dig into how you make money: gross margin by trade and job type, pricing discipline, labor utilization. A 15% EBITDA margin built on disciplined pricing and dispatch is worth more than an 18% margin propped up by an underpaid owner doing three jobs.

Management depth and low owner-dependence

If revenue walks out the door when you do, a buyer isn’t acquiring a business — they’re acquiring a job opening. A general manager or strong operations lead, documented processes, and customer relationships held at the company level rather than in your phone all directly support price and deal certainty.

The right revenue mix

Buyers pay up for residential service and replacement revenue — demand-driven, high-margin, repeatable work — and discount heavy new-construction exposure. A word on maintenance agreements: they help, but not for the reason brokers claim. At $150–$200 a year, agreement revenue itself is a rounding error. Their real value is retention and lead flow — a membership base that reliably converts into replacements and repairs. Smart buyers underwrite them that way, so present them that way. If you’re an HVAC owner specifically, our guide on selling your HVAC business goes deeper on positioning.

What Multiples Look Like in This Market

For quality companies in the $5M–$30M revenue range, 4–7x EBITDA remains the realistic band, with where you land inside it driven by the factors above. Smaller owner-operated shops trade below that range — the SBA math we walked through guarantees it. True platform-scale deals trade well above it: Sila’s reported sale to Goldman Sachs was underwritten well into the double digits, but those are platforms with institutional infrastructure and hundreds of millions in revenue, not a $12M contractor. Anyone quoting you platform multiples for an add-on-sized business is selling you something. We break the drivers down line by line in our home services valuation multiples guide.

So Is It Actually a Buyer’s Market?

For the average company, yes. Buyers have more selection, cheaper-than-2024 but still-expensive debt, and no urgency — so they push on earn-outs, working capital pegs, and diligence findings. For genuinely clean companies in good markets, it doesn’t feel like a buyer’s market at all; scarcity of quality targets still produces multiple bidders.

The practical takeaway: the spread between prepared and unprepared sellers is the widest I’ve seen. Twelve to twenty-four months of deliberate exit preparation — accrual books, margin repair, a second layer of management — routinely moves a company a full turn of EBITDA, which on a $3M EBITDA business is $3M of proceeds. No rate cut will ever do that for you.

FAQ

Will multiples go back up if the Fed keeps cutting?

Modestly, maybe — cheaper debt supports higher prices at the margin. But the bigger force now is buyer selectivity, not the cost of capital. A rate cut helps every seller a little; fixing your financials and owner-dependence helps you a lot. Don’t time the Fed; prepare the company.

Are PE platforms still buying companies my size?

Yes — add-on acquisitions in the $5M–$30M revenue range remain the core of the consolidation model, and the major platforms collectively closed dozens of them in 2025. What’s changed is the screen: they want service-heavy revenue, real management, and books they can diligence fast. Companies that fit still get competitive interest.

How long before a sale should I start preparing?

Eighteen to twenty-four months is the realistic minimum if your books are cash-basis or owner-dependence is high, because buyers want to see the improved performance sustained, not promised. If your financials are already clean, six to twelve months of process prep can suffice. Starting earlier never costs you; starting late always does.

About the Author

Matthew Mooney

Matthew Mooney is a co-founder of Profitability Partners and a former private equity professional with deep experience in home services M&A. Over the course of his career, Matthew has reviewed over 200 acquisitions of HVAC, plumbing, roofing, and electrical companies. He previously worked at Apex Service Partners, one of the largest residential home services platforms in the country — giving him a rare, buyer-side perspective on what drives valuation, profitability, and deal structure in the trades. He now helps contractors and home services business owners optimize their financials, plan for exits, and maximize the value of their companies.

Connect on LinkedIn

Matthew Mooney

Matthew Mooney is a co-founder of Profitability Partners and a former private equity professional with deep experience in home services M&A. Over the course of his career, Matthew has reviewed over 200 acquisitions of HVAC, plumbing, roofing, and electrical companies. He previously worked at Apex Service Partners, one of the largest residential home services platforms in the country — giving him a rare, buyer-side perspective on what drives valuation, profitability, and deal structure in the trades. He now helps contractors and home services business owners optimize their financials, plan for exits, and maximize the value of their companies.