So, here’s the scoop: HVAC, plumbing, and electrical companies are shaking things up in the way they interact with homeowners. Thanks to some big-money private equity firms swooping in and consolidating these trades into a neat little home services package, the dynamics are changing faster than you can say “where’s my wrench?” It’s like a game of Monopoly, but instead of hotels, we’re talking about HVAC systems and plumbing repairs. While this might mean some fancy upgrades and potentially lower costs for us, it also means technicians are now under pressure to hit sales targets, which could lead to some questionable upselling tactics. So, buckle up and stay savvy, folks – this is the new normal, and we need to navigate it like seasoned pros!
Takeaways:
- The HVAC, plumbing, and electrical industries are seeing a surge in private equity investment, reshaping how they operate with homeowners.
- Contractors are now facing pressure to upsell services due to performance goals set by larger private equity firms in the trade industry.
- This consolidation trend means homeowners may experience higher pressure sales tactics during service calls, which can be quite annoying and costly.
- Private equity groups are aiming for economies of scale by bundling HVAC, plumbing, and electrical services, but this comes at a cost to consumer experience.
- We need to be cautious when engaging with these larger companies, as their profit-driven focus could lead to unnecessary upsells and pressure tactics.
- Understanding the motivations of service technicians has never been more crucial; they’re now often incentivized to sell more than just fix what’s broken.
Links referenced in this episode:
Companies mentioned in this episode:
- Eric G
- Goldman Sachs
- Morgan Stanley Capital Partners
- Blackstone
- Leonard Green
- First Call Mechanical
- Seal Heating and Air Conditioning
- Redwood Services
- The SEER Group
- Apex Service Partners
- Service Champions
- Cam Anderson
Transcript
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Speaker B:The House with Eric G. Your Go to Source for Everything Home Improvement Whether you're a DIY enthusiast or just looking to make your space shine, Eric G.
Speaker A:Is here to guide you through the latest tips, tricks and trends.
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Speaker A:Eric G. Welcome to the around the House show, your trusted source for everything about your home.
Speaker A:Thanks for joining me today, I'm Eric G. Happy midweek special.
Speaker A:This is that show we talk about the stuff that didn't make it into last weekend's show.
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Speaker A:Just go to YouTube and search around the House Eric gave.
Speaker A:And then of course our different content where we're gonna have more tips, more tricks and maybe some of our super high profile interviews over there.
Speaker A:That'll be around the House hq.
Speaker A:Well, today I wanted to talk about something that's really changing out there and it's changing for homeowners, it's challenging for contractors, and we have got something that's been going on for a number of years.
Speaker A:Very quietly in the background we are seeing private equity groups, those PE firms going after the trades.
Speaker A:What I mean by that, they have been aggressively acquiring and consolidating H Vac plumbing and electrical into a home services category.
Speaker A:And I'm using air quotes there for a number of years now.
Speaker A:And so this is a classic roll up strategy.
Speaker A:And when it comes to business is a very fragmented industry which is primarily run by small family owned companies.
Speaker A:So what's going on now is these private equity firms, big companies, they'll add numerous smaller kind of bolt on acquisitions to build regional or national networks.
Speaker A:That way they can get that economy scale.
Speaker A:And so what happens is let's say if you're putting a new H Vac system, sometimes you need a plumber, sometimes you need an electrician.
Speaker A:They're buying all three of those so they can be in the home services category.
Speaker A:And what does that do?
Speaker A:That keeps the cost down.
Speaker A:And then while they're out there, oh, you want that new light put up, let's do that.
Speaker A:Or oh, we can do more.
Speaker A:Since:Speaker A:And that covers the larger ones.
Speaker A:Most of the small ones go unreported and so we're really seeing H Vac focus stuff really going on right now.
Speaker A:And so there's a lot of stuff like first call mechanical 15+BUYS, under sky Night private equity, Seal heating and air conditioning, dozens of acquisitions, later a majority stake buy, Goldman Sachs alternatives and then other companies like Redwood Services, 35 plus acquisitions, the SEER Group, Apex Service Partners, Service Champions and more.
Speaker A:So we're seeing these big companies like Morgan Stanley Capital Partners, Blackstone Champions Group Deal, Leonard Green and Partner and other multi trade platforms.
Speaker A:So there's a lot of different people jumping in right now.
Speaker A:And so it's, it's really, it's interesting because on the dollar side of things it's recession resistant.
Speaker A:People always need their H Vac fixed and they get reoccurring revenue from maintenance.
Speaker A:Now here is the interesting part of this.
Speaker A:We're starting to see now that they're buying these up, these guys are all about the profits, right?
Speaker A:They are trying to make these things as profitable as possible, possible.
Speaker A:So what are we seeing?
Speaker A:We're seeing those people in the field that are working for these now larger companies where year or two ago they were probably working for a small company, they now have aggressive revenue growth that they're trying to achieve.
Speaker A:What's that mean?
Speaker A:Well, when your H. VAC person or your plumber or your electrician comes out, they're in the upsell mood because they're told they have sales goals now to hit.
Speaker A:Where before they were just out there fixing what was needed.
Speaker A:Now that shift is going, you gotta hit the numbers and you've got performance scorecards, targets, incentives, things like that.
Speaker A:So you're seeing much more on the commission driven models which means the more markup you get, the more money they make.
Speaker A:So you're getting a higher turnover due to aggressive schedules, sales quotas, reduced autonomy.
Speaker A:So you're seeing this kind of stuff.
Speaker A:The problem is as the consumer you're gonna see this stuff turn out where you get higher pressure sales, you're gonna see that stuff getting pushed.
Speaker A:And so that's not good for the consumer.
Speaker A:I like it when the plumber comes out and goes here's what you really need to do, here is the place to be.
Speaker A:So I have a problem with that and so be very careful.
Speaker A:Now some of these private equity groups do professionalize operations.
Speaker A:They will raise technician pay initially, improve efficiency and expand services.
Speaker A:However though you are going to see much more pressure from these companies pushing on, they got to hit the sales.
Speaker A:So when they come out there and they're out there to fix something, they could be selling you on the most expensive way to fix it.
Speaker A:They could be selling you on added services as well.
Speaker A:So be really careful out there.
Speaker A:Understand who you're working with, understand what their goals are and if they're trying to push you up, that could be what's part of their new job description.
Speaker A:So be really careful out there, guys.
Speaker A:These three trades, which are high value trades and there's a ton of great companies out there, but you got to be a little careful with who you're dealing with now because some of these new private equity firms are pushing them to sell.
Speaker A:And that's coming out of your wallet now in the recalls business here, looking around, we've got thermos recalling 8.2 million stainless king food jars and bottles due to serious impact injury or laceration hazards and or so perishable food or beverages are stored in the container for an extended period of time.
Speaker A:That stopper can forcefully eject, AKA launch when opened, which can resort or result in a serious impact injury and or laceration hazards to the consumer.
Speaker A:About 5.8 million of these and 2.3 million sportsman food and beverage bottles.
Speaker A:So be careful there.
Speaker A:That's a big one.
Speaker A:The rest of the stuff here is all stuff we've talked about recently.
Speaker A:Lots of different pressure washers, lots of different things out there.
Speaker A:Those are the big ones, so be careful with those right there.
Speaker A:Want to make sure that that.
Speaker A:Be careful that you're using those things and to make sure that you're played safe with those thermos bottles.
Speaker A:That's a big one.
Speaker A:And I don't want to see people getting hurt out of the thermos.
Speaker A:You're just trying to get something to drink and that thing launches.
Speaker A:It's never good.
Speaker A:It is never good.
Speaker A:For the recalls for the 3,000, 3,020 food jars, consumers will be asked to throw away the stopper and send a photo of the disposed stopper to thermos.
Speaker A:They'll send you a new one.
Speaker A:And for the three recalled 3,010 bottles, consumers will be asked to return the recalled bottle to thermos using a prepaid shipping label.
Speaker A:So anytime that you're wanting these kind of things, take a look, more information, go over to CPSC.gov and you can find all the data right there.
Speaker A:This is interesting stuff, guys, so be careful out there.
Speaker A:Anyway, today we got a great show coming up this weekend.
Speaker A:We'll talk a little bit more about it later.
Speaker A:I gotta get back to my projects.
Speaker A:I got a bunch of stuff going on right now.
Speaker A:Which I'm excited for.
Speaker A:And we got some great stuff coming up here in the future.
Speaker A:Some good interviews, videos, a lot of videos getting ready to pop out.
Speaker A:And thanks for everybody that's been watching the Blacktail Studio build over there or Blacktail Ranch actually through Cam Anderson and his channel.
Speaker A:We've been having fun over there and boy, that thing's been taken off and that's been a lot of fun.
Speaker A:All right, everybody, I'll let you get back at Back to It.
Speaker A:I got to get back to work.
Speaker A:I need another cup of coffee as well.
Speaker A:Thanks for tuning in around the House.
Speaker A:We'll see you on Saturday.
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