4 Lessons from a Fund Manager Who Buys Trade Businesses

This week, I had the opportunity to sit down with a private equity manager planning to deploy $500 million over the next five years, focusing mainly on blue-collar businesses. Interestingly, we’re also building his custom home at the moment.

What I learned shocked me—in a good way. Here are four takeaways from our conversation and what they mean for you.

1) The Rumors Are True—Private Equity Wants Trade Companies

Yes, private equity is actively buying trade businesses. According to our client, they’re doing “deal deals” regularly, and the multiples can be impressive. (For context, a “multiple” refers to how many times the company’s earnings or EBITDA they’re willing to pay. So, a 7x multiple on $1 million EBITDA means a $7 million purchase price.)

For top-tier businesses, he’s seen multiples as high as 15x EBITDA—a number that caught me off guard since I’ve only seen deals reach 7-8x before.

So, what does it take to get a 15x multiple? Let’s dive in.

2) Heartland Home Services as a Prime Example

If you’re curious about what these ideal deals look like, check out Heartland Home Services (heartlandhomeservices.com). Their portfolio shows 42 brands, mostly in HVAC, plumbing, and electrical services—all legacy businesses that have scaled to $2-5 million or more in EBITDA. These aren’t your average startups; they’re established companies that have weathered the storms and proved themselves sustainable.

This is the benchmark. If you’re aiming for a 15x exit, this is the level you need to target: specialized, mature, and stable brands in fields with high service demand.

This can be accomplished by building a brand or acquiring and scaling one. But there is a key to attracting this kind of insane multiple.

3) The Key? Trades Needing Specialized Technicians

One key factor: private equity is particularly interested in trade businesses that require specialized technicians, like electrical, HVAC, and plumbing. Why? They anticipate a shortage of skilled professionals in these trades down the line, which makes these companies valuable long-term investments.

Think of it as a future-proofing move for investors; they’re banking on the rising demand for skilled services in an industry that’s facing a talent crunch.

And while those of us who work in the trenches see this as an obvious problem we need to overcome, those of them that work in offices, crunching numbers, see this as a potential downstream catastrophe. And they are willing to pay to mitigate it.

My point is, if you are the type of entrepreneur who can solve this problem of hiring, training and retaining skilled labor, you will very likely be rich my friend.

4) What’s the Play?

Our client’s advice? Either buy or start a trade business in a niche like HVAC or plumbing (skilled technician labor) and grow it to that $2-5 million EBITDA mark. Sounds easy, right? Well, having been in the trenches myself, having done this, I can tell you it’s not—but it’s doable in 2-3 y

Below, I’ve shared my 20k Blueprint—the strategy I use to build any trade business. It’s what I implement with clients to help them reach the next level.

Bonus: The Trade Business That Sells for 20x (Find Out in Our Community)

There’s one more trade sector I didn’t mention above, and it’s trading at closer to 20x multiples. Curious what it is? Join us in the community at members.truebuilder.com, where I’ll be bringing more case studies, interviews, and a place for you to ask your questions. The community’s just getting started, and it’s free for now, so join while you can!