Millennial Buyers Are Turning to HVAC and Plumbing Firms as Boomers Exit

A measurable shift in small business ownership is reshaping the acquisition market, as more millennials in their 30s and early 40s buy existing HVAC, plumbing, electrical and other essential trade businesses instead of starting companies from scratch.

The trend, reported by Inc. and supported by transaction data from several institutional sources, reflects forces larger than generational preference. Aging baby boomer owners are looking for exits, many lack succession plans, SBA financing remains available for established cash-flow businesses, and the startup market still carries high failure rates and long paths to revenue.

Private equity has also moved aggressively into the category. Investors have acquired nearly 800 HVAC, plumbing, and electrical companies since 2022, according to PitchBook data cited by the Wall Street Journal and the American Investment Council. That institutional appetite helps explain why individual millennial buyers are also targeting the trades, though the available data does not yet show whether they are succeeding at higher rates than prior buyer cohorts.

Boomer owners are creating a large supply of trade businesses for sale

The supply side of the acquisition wave is being driven by retiring owners. The combined U.S. HVAC and plumbing services market generates about $205 billion in annual revenue and has grown at a 3.2-5.7% compound annual growth rate over the past five years, with forecasts calling for 4-6% annual growth through 2030. Population growth in the Sun Belt and aging residential and commercial infrastructure continue to support demand.

The more immediate driver, however, is ownership turnover. Many founders who built these businesses over decades are now in their 50s and 60s and do not have internal successors ready to take over.

Industry analysts have described the moment as a historic transition. Research tracking the broader wave of small business sales from retiring boomers places the total value of businesses expected to change hands in the trillions of dollars. Home services and essential trades make up a meaningful part of that opportunity because they remain fragmented and founder-owned.

A plumbing or HVAC business with $2-8 million in annual revenue is often too small for many institutional buyers to acquire directly and too operationally demanding for an absentee owner. That makes it a natural fit for an owner-operator who can step into day-to-day management.

Capital markets are also shaping the timing. Eased credit conditions in 2024 and early 2025 brought more buyers into the market. In commercial HVAC and plumbing M&A, strategic buyers represented 49.4% of transactions year-to-date in 2025, down from 67.1% in earlier periods, as private equity sponsors increased their share of deal flow. That competition is raising demand for quality platforms while still leaving many smaller businesses available to individual buyers using SBA financing.

The buyers moving into the trades are not always career tradespeople. Many are former corporate employees, consultants, finance professionals or MBA graduates who are applying management and capital-allocation skills to businesses built by technically skilled founders.

The search fund model has become one pathway into the market. Under that model, an individual or small team raises capital to search for an acquisition target, then raises separate financing to complete the deal. Search funds have been common in MBA circles since the late 2000s, and their use in essential trades has accelerated as more owners approach retirement.

SBA 7(a) loans are a key financing tool for individual buyers. The program allows qualified buyers to finance acquisitions of existing businesses with as little as 10% down on deals up to $5 million. The SBA guarantee reduces lender risk and can make a deal financeable when conventional bank lending would not.

For example, a buyer acquiring a plumbing company with $1.5 million in seller’s discretionary earnings may be able to structure a deal through SBA financing. However, the SBA does not publish loan approval data by borrower age cohort in a way that allows a precise count of millennial buyers. That means the generational composition of the buyer pool is still based largely on market surveys, transaction platforms and anecdotal reporting.

Survey data on the generational business ownership transition has documented a persistent mismatch between boomer sellers seeking exits and the pace at which younger buyers are stepping into ownership roles. The current trades acquisition wave appears to be closing part of that gap, though not enough data exists to say how far.

Trades offer established cash flow and less exposure to AI disruption

The appeal of trades acquisition is economic as much as cultural. About 20% of new businesses fail within their first year, and roughly 45% fail within five years, according to Bureau of Labor Statistics Business Employment Dynamics data. Those failure rates are especially relevant for startup founders who may need years of capital before reaching profitability.

An HVAC company with an established customer base, maintenance contracts, supplier relationships and trained technicians offers a different risk profile. It has revenue on day one of new ownership, even if the operator still has to manage labor, customer service, pricing and growth.

The AI-resistance argument has also gained traction. HVAC diagnostics, plumbing repairs and electrical work require licensed technicians on site. Software can support scheduling, dispatch and marketing, but it cannot replace the physical service itself in the near term. That gives well-run trade businesses a labor moat that many digital-first businesses do not have.

Regulation is another demand driver. EPA refrigerant phaseouts and tighter energy-efficiency standards are expected to support HVAC replacement and upgrade activity through the end of the decade. That gives buyers a structural tailwind that is less dependent on discretionary consumer spending.

Professionalized management can also change the economics of founder-led trade businesses. Revenue growth from $30 million to approximately $70 million has been documented at firms such as Rite Way Heating, Cooling & Plumbing following capital investment and management professionalization. Alpine Investors, through its Apex service platform, reports an average 20% pay increase for technicians in the first year after acquisition. Those examples show the potential upside, but they come from institutional buyers and may not apply to individual millennial acquirers without platform-level resources.

Kauffman Foundation data on small business formation trends provides additional context for why acquisition is becoming more attractive. Startup formation has remained volatile since the post-pandemic surge, and many new businesses are now reaching the stage where survival rates begin to diverge sharply from early optimism.

Data gaps make it hard to measure the trend’s durability

The available evidence shows that millennial interest in acquiring trades businesses is real, but several limits remain. No federal dataset tracks small business acquisitions by buyer age cohort in a systematic public format. SBA 7(a) loan records do not provide borrower demographics in a way that would allow analysts to count millennial acquisitions with precision.

BizBuySell transaction data is useful, but it covers only deals listed on its platform. It does not capture private transactions, seller-financed deals or acquisitions completed through brokers and intermediaries, which likely represent a significant portion of trades business sales.

There is also no long-term outcome data showing whether millennial buyers of trade businesses outperform or underperform prior acquisition cohorts. The asset class looks attractive on paper, but most of the recent deals have not yet reached the five- to seven-year mark needed to assess execution quality.

Finally, the current trend may reflect timing as much as generational preference. Tech layoffs, higher startup failure visibility, tighter venture capital conditions and a large cohort of retiring sellers are all pushing buyers toward established cash-flow businesses. It is not clear whether the same millennial buyers would have made similar choices in a stronger venture capital market.

Transaction data, SBA lending and labor trends will show whether the shift lasts

• BizBuySell Quarterly Insight Report. CoStar Group’s report tracks closed small business transaction volume, median sale prices and sector activity. In home services, narrowing gaps between asking and sale prices would suggest sustained buyer demand.
• SBA 7(a) loan program volume. SBA lending data by industry and loan size can show whether financing remains available for plumbing, HVAC and electrical acquisitions. Falling approvals in relevant NAICS codes could limit individual buyer access.
• PitchBook home services M&A data. Institutional deal volume will show whether private equity competition is crowding out individual buyers or whether the seller pool remains large enough for both groups.
• EPA refrigerant phaseout implementation. Replacement and retrofit activity tied to the AIM Act will help determine whether HVAC demand continues to support acquisition valuations.
• MBA program search fund surveys. Stanford Graduate School of Business and IESE Business School surveys can show whether search funds continue moving into home services and trades or rotate back toward technology and software.
• Bureau of Labor Statistics wage data for trades. Employment and wage trends for HVAC technicians, plumbers and electricians will indicate whether labor scarcity continues to support the acquisition thesis.

The millennial move into HVAC, plumbing and other essential trades appears to be more than a passing anecdote. It is supported by retiring boomer sellers, available SBA financing, durable service demand and growing interest in established cash-flow businesses. What remains uncertain is whether the trend represents a long-term change in how younger buyers approach business ownership or a cyclical response to a specific moment in the economy.