Aaron Rice is a plumber with two special tattoos on his left leg. One tattoo represents the plumbing business he started over ten years ago, and the other shows the name of a company that recently bought it. Rice works in Tucson, Arizona, where summer temperatures often soar to 100 degrees. This makes local plumbing, heating, and air-conditioning services incredibly important for residents who need relief from the heat.

For years, Rice was wary of offers from investors outside of Arizona wanting to buy his business. He thought they didn’t understand the plumbing trade or care about his customers—they were just looking to make money. But in 2022, when a local HVAC company backed by private equity reached out, he decided to sell, believing they understood the industry better than others, reports The Wall Street Journal.

The Growing Influence of Private Equity

In recent years, private equity (PE) firms have become increasingly interested in buying home services like plumbing and HVAC (heating, ventilation, and air conditioning). These firms aim to make money by merging smaller companies into larger, more profitable operations. This shift has changed the landscape of the skilled trades. Many small business owners, who used to pass their companies down to family or employees, are now selling for millions of dollars.

This trend is creating a new class of millionaires in the trades, making skilled work more appealing. Brian Rassel, a partner at Huron Capital, emphasizes that you don’t need to be in Silicon Valley to find great career and business opportunities.

Rice, who plans to retire in seven years, feels more secure now that he’s sold his company. The sale has provided peace of mind for him and his family.

The Payoffs of Selling

If you live in a big city, you may have noticed many service trucks changing hands. Since 2022, nearly 800 HVAC, plumbing, and electrical companies have been bought by private equity firms, according to research from PitchBook. These transactions often involve seven- or eight-figure payouts for the sellers.

Aaron Rice’s plumbing company was acquired by Redwood Services, a private equity-backed company, which had also purchased a larger HVAC company called Rite Way. Redwood has been on a buying spree, acquiring 35 companies in four years, ranging from smaller businesses like Rice’s to larger firms valued at around $20 million.

In the past, skilled trades offered solid pay without requiring a college degree. Now, they also provide opportunities for ambitious entrepreneurs to grow their businesses. Rice started his plumbing business after overcoming personal struggles, including addiction and spending time in prison. When he sold his business, it was generating about $3 million in revenue annually and had 18 employees.

Even after selling, Rice continues to work as a sewer department manager at Rite Way, where he plans to stay until he retires. Selling his company has allowed him to focus on enjoying life—hunting, fishing, and spending time with family.

Building a Bigger Empire

Private equity firms like Redwood are changing the way home service companies operate. Since acquiring Rite Way, the company’s annual revenue has jumped from $30 million to around $70 million. They are expanding beyond HVAC services into plumbing and electrical work, allowing them to reach more customers.

With more resources, Redwood can afford to add more service trucks, hire more workers, and even start apprenticeship programs to train new technicians. They regularly update their pricing to stay competitive, which is something smaller companies often struggle to do. Rick Walter, Rite Way’s former owner, says the change has greatly reduced his stress, allowing him to enjoy life after many years of hard work.

A New Outlook for Small-Business Owners

In the past, most small-business owners in the trades wanted to sell their businesses and retire. Nowadays, a growing number are eager to stay involved and grow their companies with the help of private equity. These owners see that teaming up with investors can lead to bigger opportunities than going it alone.

For example, Graham Weaver, founder of Alpine Investors, notes that employees at the HVAC companies they buy often see their pay increase by 20% in the first year after a sale, thanks to better wages and bonuses. This has encouraged more workers to consider the trades as a viable career path.

The Bittersweet Side of Selling

However, not all owners feel entirely happy about selling. Dana Spears co-founded an HVAC business in Florida and has received over 100 offers to sell since 2020. Although she eventually decided to sell, she worried about her employees’ futures. After careful consideration, she chose a buyer she could trust.

Now, Spears plans to take a year off to spend with her family but is already thinking about starting another home services business. She feels that the trades are finally getting the recognition they deserve, proving that with hard work, anyone can achieve the American dream.

The rising interest from private equity in the plumbing and HVAC sectors is reshaping the industry. Many owners are finding new opportunities, whether by selling their businesses or teaming up with investors to expand. The changes are making skilled trades more appealing, helping to create a new generation of successful entrepreneurs. As this trend continues, the world of plumbing, heating, and air conditioning is becoming a place where hard work can lead to big rewards.