Key Takeaways
- • Private equity firms accounted for 60.5% of residential services M&A activity in 2026 year-to-date through July 27, according to Capstone Partners' October 2026 Residential Services M&A Update.
- • HVAC, plumbing, and electrical businesses represented 19.3% of residential services deal activity, ranking second behind landscaping and lawn care.
- • Private equity-backed buyers completed 27 of 43 HVAC, plumbing, and electrical transactions, equal to 62.8% of segment deal volume.
- • Capstone counted 223 residential services transactions year to date, down from 257 in the same period of 2025, signaling a modest slowdown in deal flow.
- • Qualified labor, not customer demand, is the primary constraint on growth, with HVAC technician supply projected to fall from 63.8% of demand in 2024 to 62.9% by 2029.
Summary
Private equity firms continue to dominate residential services consolidation. According to Capstone Partners' October 2026 Residential Services M&A Update, private equity accounted for 60.5% of residential services mergers and acquisitions activity in 2026 year to date through July 27. Within HVAC, plumbing, and electrical, private equity-backed buyers completed 27 of 43 transactions, or 62.8% of segment volume, and the segment ranked second by share of activity behind landscaping and lawn care.
Total activity showed a modest slowdown. Capstone reported 223 residential services transactions announced or completed year to date, compared with 257 in the same period of 2025. The report attributes continued investor interest in HVAC businesses to recurring customer relationships, membership-based service models, and essential service demand. Buyers favor companies with recurring revenue, dense service routes, stable labor, and modern back-office systems. Wrench Group, backed by Leonard Green, remained among the segment's most active private equity platforms, expanding through acquisitions of established local operators across multiple regions.
Labor is the central constraint. Capstone data show HVAC technician supply met 63.8% of demand in 2024, with the figure projected to decline to 62.9% by 2029, citing the TechForce Foundation's 2026 Supply, Demand & Opportunity report. Capstone's Residential Services index shows average gross margins falling from 57.5% in the first quarter of 2017 to 48.8% in the first quarter of 2026. Buyers increasingly assess whether targets have systems for recruiting, training, and retaining technicians, and whether customer relationships are embedded in the organization rather than dependent on the owner.
Phil Krieger, managing director at Capstone Partners and lead contributor to the report, said, "Customer demand is not the limiting factor to growth — qualified labor is." He added that buyers increasingly value the systems, culture, and infrastructure needed to develop and retain technicians at scale. Capstone expects labor challenges and consolidation to remain key factors in residential services through 2026 and 2027.
Total activity showed a modest slowdown. Capstone reported 223 residential services transactions announced or completed year to date, compared with 257 in the same period of 2025. The report attributes continued investor interest in HVAC businesses to recurring customer relationships, membership-based service models, and essential service demand. Buyers favor companies with recurring revenue, dense service routes, stable labor, and modern back-office systems. Wrench Group, backed by Leonard Green, remained among the segment's most active private equity platforms, expanding through acquisitions of established local operators across multiple regions.
Labor is the central constraint. Capstone data show HVAC technician supply met 63.8% of demand in 2024, with the figure projected to decline to 62.9% by 2029, citing the TechForce Foundation's 2026 Supply, Demand & Opportunity report. Capstone's Residential Services index shows average gross margins falling from 57.5% in the first quarter of 2017 to 48.8% in the first quarter of 2026. Buyers increasingly assess whether targets have systems for recruiting, training, and retaining technicians, and whether customer relationships are embedded in the organization rather than dependent on the owner.
Phil Krieger, managing director at Capstone Partners and lead contributor to the report, said, "Customer demand is not the limiting factor to growth — qualified labor is." He added that buyers increasingly value the systems, culture, and infrastructure needed to develop and retain technicians at scale. Capstone expects labor challenges and consolidation to remain key factors in residential services through 2026 and 2027.
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