The New HVAC Gold Rush

But that’s old news. As Justin Wolfort wrote for ACHR NEWS this fall, the new battleground is upstream: equipment manufacturers, driven by an explosion in data-center demand for advanced cooling. 

The trigger is clear. The ongoing build-out of data centers — powered by AI, cloud computing, and relentless digital demand — is creating a heat load unlike anything traditional cooling was designed to handle. The result? A surge in demand for efficient, high-capacity, sustainable cooling solutions. 

To PE investors, that’s the smell of money.  

“Investor interest is soaring in these technologies,” Wolfort wrote. For them, HVAC equipment isn’t just commodity — it’s infrastructure.  

Take Blackstone’s $14 billion acquisition of Copeland (formerly Emerson Climate Technologies) in 2024. Compressors, controls, thermostats, valves, monitoring solutions: these components align neatly with PE’s preferred investment profile. They’re high-value, long-lived, and recurring — and they spawn entire secondary markets in sensors, monitoring, and control upgrades. 

Buying Innovation 

PE isn’t the only one making strategic purchases. HVAC manufacturers know that the companies able to deliver high-efficiency, high-reliability cooling — or to build a suite of offerings covering chillers, controls, monitoring, and replacement parts — are sitting on a growth runway. HVAC manufacturing companies have been on a buying spree themselves, snapping up innovative startups or smaller companies with stellar engineering departments working on next-gen cooling equipment. 

It’s spilling over into the sheet metal industry, too. If equipment is attracting capital, so is the infrastructure needed to build it — starting with fabrication. Big general contractors like DPR, Haskell, and more recently Harris, which has acquired several specialty contractors in the last few years, are buying up prefab shops and specialty trade businesses. The goal: to self-perform more work (control quality, lower costs, move faster) and offer multiple trades/services under one corporate roof. 

“The explosion of data center projects is so intense that GCs and trade contractors are starting to split up traditional roles: for example, separating field installation work from offsite prefabrication work,” said Alice Leung, principal at Brick & Mortar Ventures, speaking at SMACNA’s annual conference. This means companies might just do prefab for others, or specialize in labor/installation only. 

And it’s shaking up the construction supply chain. Large contractors and venture-backed startups are increasingly buying materials directly from factories (sometimes overseas), cutting out traditional distributors like Ferguson or Watsco, she continued. Some PE-backed groups like Reedy Industries have also consolidated their purchasing to leverage national distributor relationships, further squeezing out small and independent suppliers. 

“I don’t like saying ‘cutting out distributors,’ but that is kind of what they’re trying to do: take away as many layers of that local procurement supply chain as possible so that you can get a better rate,” said Leung. “I know there’s a lot of relationships between contractors and distributors and suppliers, and it has been that way for a really long time. But we are starting to see more and more venture-backed startups that are trying to figure out [how to] redesign the supply chain so that we’re cutting out more people.” 

Contractor Buyups: Still Hot, But A Lot Smarter 

Back on the contractor side, the last time we wrote about HVAC contractor buyups, it looked like the frenzy was cooling. That’s still true — but it turns out the market didn’t slow down so much as wise up. 

Patrick Lange, president of Business Modification Group, said the era of “buy anything fast” has become far more measured. The mega consolidators are more selective: Lange said the days of $10 million-plus shops sparking blind bidding wars are mostly over. Buyers want data, not just revenue. But don’t mistake caution for collapse. Lange’s deal volume is still up year-over-year — and has been every year.

Sector focus is shifting, too. Residential got expensive; commercial is suddenly the hot territory. Lange used to see one or two commercial listings a year. Now he has three or four under contract at once. 

At the top of the pyramid, cracks are beginning to show. Some of the big PE-backed roll-ups simply overpaid in the early 2020s, when interest rates were low and money was cheap. Weather and the economy didn’t help. Equipment shipments fell in 2024, carving big holes in sales-first business models. As Lange put it: “There’s a lot of people who don’t fix air conditioners. They just sell new ones.” In a softer demand environment, that approach breaks quickly. Debt piles up. 

PE wants returns in three to five years, which means the clock is ticking for groups that levered up during COVID home-improvement mania and now have to operate in a service-first, replacement-resistant market. Air Pros’ collapse last year — followed by its purchase by Apex — was a warning shot. According to Lange, some of the biggest names in the space will merge, sell, or simply go away. 

The surprise twist comes with the rise of the small consolidator. These are former PE folks or financially savvy operators who buy two, three, four shops at a time, often with SBA financing. They’re quieter, more local. Many even have a personal reason for staying away from PE culture. 

“We sold quite a few to kids whose parents sold to private equity,” Lange told me, “and the kids didn’t like working for private equity.” Now they’re starting their own roll-ups — and competing with the original consolidators that pushed them out. 

Perhaps now is their moment — and a reminder that in HVAC, smart money never really leaves. It just learns where to look next.