Where are HVAC valuations right now compared to historical valuations?

HVAC was one of the first home services trades that private equity identified as an acquisition target, which means the valuation cycle in HVAC has played out longer and more visibly than in almost any other trade.

Understanding where that cycle sits today is one of the most useful things an HVAC owner can know before they decide whether and when to sell.

Historically, HVAC businesses sold in the 2.5x to 5x EBITDA range.

That was the market for years, driven by a buyer pool made up largely of local competitors and individual buyers without access to institutional capital.

As private equity entered the space and began building platforms through acquisition, competition for quality HVAC operators intensified and multiples climbed with it.

In the years following COVID, when interest rates were near zero and capital was essentially free, valuations pushed into the 5x to 12x range for well-run businesses.

That environment was exceptional and reflected conditions that were never going to last.

Today the market has settled into the 3x to 7x range, with stronger businesses in better markets pushing toward the top and beyond.

That's still meaningfully above the historical baseline and it's still a genuinely favorable environment for sellers.

PE groups and consolidators remain active, the fragmented nature of the HVAC industry continues to make well-run independents attractive acquisition targets, and buyer appetite for quality businesses is real.

But the peak multiples available when rates were at zero are largely behind us, and unless the interest rate environment changes dramatically, that window is closed.

The honest answer is that right now is still a good time to consider selling.

It’s better than the historical norm and still has a meaningful buyer pool that won't be there indefinitely.

Over time, as capital costs remain elevated and the acquisition pace of PE groups and consolidators eventually moderates, valuations are more likely to drift back toward historical ranges than to recover to post-COVID peaks.

Owners who are thinking about selling in the next two to three years are in a stronger position today than they will be down the road.