There is a number buried in McKinsey’s research on the home services market that explains a lot about why private equity has become obsessed with the trades: 76 percent of companies performing critical and rare services — think HVAC installation, complex plumbing, and electrical work — are true independents. Not franchises. Not PE-backed platforms. Single-owner or small-partnership businesses operating in a local market. For a deeper look, see our guide on what every owner should know about PE in home services.
In plumbing repairs specifically, 70 percent of market share is held by independent companies. In the broader home services landscape, the vast majority of the $700 billion market is operated by companies with no institutional backing, no professional management layer, and in many cases, no financial infrastructure beyond a bookkeeper and a tax preparer.
That is the opportunity — and the threat — depending on which side of it you are standing on.
Why PE Sees Fragmentation as a Goldmine
Private equity firms look at fragmented industries the way a real estate developer looks at a block of undervalued lots. The playbook is straightforward: acquire a well-run platform company, bolt on smaller operators at lower multiples, centralize back-office functions, implement operational improvements, and sell the combined entity at a premium.
The home services sector went from representing 2 percent of consumer services deal activity in 2017 to 6 percent by 2022 — a 27 percent compound annual growth rate in deal volume. Blackstone’s $2.5 billion acquisition of the Champions Group in early 2026 signaled that the largest players in private equity see this trend as early innings, not late stage.
The math behind consolidation is compelling. When a PE firm acquires a $3 million revenue HVAC company at 4x EBITDA and integrates it into a platform that eventually trades at 10 to 15x, the multiple arbitrage alone creates enormous returns. Layer on top of that the operational improvements — scheduling optimization, purchasing leverage, shared marketing spend, centralized accounting — and the value creation compounds.
What This Means If You Want to Stay Independent
Not every contractor wants to sell, and not every business should. But ignoring what is happening in the market is a mistake. When a PE-backed platform enters your territory with lower customer acquisition costs, better SEO, a professional call center, and the ability to offer financing that you cannot match, you are competing against a different class of operator.
The independent contractors who will thrive in this environment share a few characteristics. They have clean financials that let them make decisions based on data rather than feel. They know their margin by service line, by technician, and by job type. They have maintenance agreement programs that create multiple customer touchpoints per year, driving upsell opportunities and reducing customer acquisition dependency. And they have a clear understanding of what their business is actually worth — not what they hope it is worth, but what a buyer would actually pay based on the numbers. Try our exit value calculator to model your current valuation.
In our experience working with home services companies as fractional CFOs, the independent operators achieving top-quartile margins are pulling the same levers that PE firms implement after acquisition: better scheduling, tighter cost controls, proactive customer retention, and disciplined pricing. We have seen these improvements deliver results comparable to what private equity achieves — without giving up ownership. You do not need institutional capital to do any of these things. You need visibility into your numbers and the willingness to manage by them.
What This Means If You Want to Sell
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In a free 30-minute call, we’ll calculate your true job costs, quantify what the gaps are costing you monthly, and give you the 3–5 highest-ROI fixes — ranked by impact.
Book a Free Call →If an exit is on your radar — even if it is three to five years away — the current environment is working in your favor, but only if your business is prepared. Buyers are actively looking for acquisitions in the trades. Deal volume is at record levels. But the premium multiples go to companies that present clean books, predictable revenue streams, and operational metrics that demonstrate the business runs without the owner in every truck.
The gap between what a well-prepared home services company sells for and what an unprepared one sells for can easily be 2 to 3x EBITDA. On a company generating $500,000 in annual EBITDA, that is a $1 million to $1.5 million difference in sale price based entirely on how the business presents to a buyer — not how well the owner turns a wrench.
Preparation means getting your financials audit-ready: clean P&L with proper revenue recognition, a balance sheet that reflects reality, job costing that proves margins by service line, and a track record of consistent reporting. It means having maintenance agreements documented and transferable. It means having key employees on retention plans. It means having a story that a buyer’s analyst can underwrite in a spreadsheet.
The financial leverage here is real and measurable. We work with home services companies as fractional CFOs, and the value creation from operational improvements is multiplied by exit multiples. One client engagement created $30 million in additional enterprise value by eliminating $250,000 per month in unnecessary costs. Another client doubled their EBITDA from $500,000 to $1 million in one year, adding $2.5 million to $4 million in exit value. For independent operators, this kind of financial discipline is the best defense against consolidation — and the best preparation for a future transaction on your terms. See where your margins stand →
The Window Is Open — But It Will Not Stay Open Forever
The 76 percent fragmentation rate is the reason PE firms are in the market. As consolidation accelerates and the percentage of independent operators shrinks, two things will happen. First, the remaining independents will face increasingly sophisticated competition from scaled platforms. Second, the easy acquisition targets will get absorbed, and buyers will become more selective about what they pay premium multiples for.
Whether you are building to hold or building to sell, the foundation is the same: you need to know your numbers, manage your margins, and run your business like someone is watching — because increasingly, someone is.
If you want help getting your financial house in order — whether for growth or for an eventual exit — that is exactly what we do.
Go deeper: Read our cornerstone guides on how to sell your home services business and understanding private equity in home services.
Raymond Gong is the founder and managing partner of Profitability Partners, a fractional CFO and bookkeeping firm serving small to mid-sized businesses nationwide. With expertise spanning financial reporting, cash flow management, tax planning, and ServiceTitan accounting integration, Raymond helps home services companies, startups, and growing businesses build the financial infrastructure they need to scale confidently. He specializes in translating complex financial data into clear, actionable insights — so owners can make smarter decisions about growth, profitability, and exit planning. Based in Tampa, FL, Raymond works with clients across HVAC, plumbing, electrical, and roofing to optimize their books, streamline reporting, and prepare for what's next.
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Raymond Gong
Raymond Gong is the founder and managing partner of Profitability Partners, a fractional CFO and bookkeeping firm serving small to mid-sized businesses nationwide. With expertise spanning financial reporting, cash flow management, tax planning, and ServiceTitan accounting integration, Raymond helps home services companies, startups, and growing businesses build the financial infrastructure they need to scale confidently. He specializes in translating complex financial data into clear, actionable insights — so owners can make smarter decisions about growth, profitability, and exit planning. Based in Tampa, FL, Raymond works with clients across HVAC, plumbing, electrical, and roofing to optimize their books, streamline reporting, and prepare for what's next.
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