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Private Equity Wants In—Is Your Business Ready to Sell?
Private equity firms are looking for recession-proof service businesses. If you run a repair or maintenance company, you might be sitting on a goldmine. Learn what it takes to attract the right buyer and maximize your valuation.
Keith Bloemendaal & Mike P
February 17, 2025
Running a small construction business is no joke—so let’s not waste time.
Here’s what’s coming your way this week:
🚧 Article this week: Private Equity Wants In—Is Your Business Ready to Sell?
🚧 3 curated articles this week higher rents are coming, yep, NYers still move to S Florida in droves, and mortgage rates dropping.
Get the knowledge you need, stay informed, and enjoy the ride.
Let’s get building!
Become a Target for Private Equity Acquisitions
Private equity money is moving into the trades. Over the past couple of years, I’ve built relationships with a handful of private equity funds and family offices, and I seem to meet a new one every few months.
Why? Perhaps it’s a trend. They want blue-collar businesses to hedge their technology bets. I don’t know. What I do know is construction and service businesses are hot right now.
And more importantly, I’ve learned what the people with the money are looking for. If you’re running a service business and have ever wondered what it takes to make your company attractive to private equity, here’s what you need to know.
What Are They Buying?
The short answer: repairs and maintenance. NOT new construction.
Private equity firms want service businesses that provide essential, recurring services. Some focus on residential, others on commercial, but they all make a critical distinction—they are not interested in new construction.
Why Not New Construction?
From a private equity perspective, new construction is too volatile. It’s tied to market cycles, interest rates, and developer activity. When the economy slows, new builds dry up.
Repairs and maintenance, on the other hand, are perpetual. Buildings, equipment, and infrastructure always need fixing. Plumbing, HVAC, roofing, electrical, pest control—these are the kinds of businesses that command attention from investors.
Do I Agree?
Not really. I own part of a custom home building company. I think a well-structured new construction business with strong branding, direct-to-consumer marketing, and a diversified client base can be just as predictable. But at the end of the day, it doesn’t matter what I think. They have the money.
They’re Getting Smarter
Private equity firms aren’t just throwing money around anymore. Many have internal management training programs where they recruit MBA graduates, teach them how to run a trade business, and place them as operators in newly acquired companies.
For founders, this changes the game. In many cases, instead of requiring you to stick around for an earn-out period, these firms want you out immediately. They buy your company, put their trained operator in place, and you walk away.
For some, that’s a scary thought—losing the business you built overnight. But speaking as someone who’s exited a construction company before, this is a feature, not a bug.
For many founders selling means getting a new boss—the private equity firm—who will push aggressive quarterly goals, meetings, and performance reviews. In reality, if you negotiate the right deal, you can sell and be done. No reporting to a PE firm, no endless Zoom meetings—just a clean exit.
Understanding Valuations and Multiples
If you’re serious about positioning your business for acquisition, you need to understand how these firms think about valuations.
Smaller businesses ($500K–$1M in EBITDA)
Typically sell for 4–5x EBITDA
Less demand for these. Fewer funds want to spend the time on small companies. (However, I still know several who do).
These are solid service businesses—plumbing, HVAC, pest control, roofing repairs, etc.
Larger businesses ($3M–$5M+ in EBITDA)
Sell for 10–15x EBITDA
The bigger the cash flow, the more attractive the deal
Why Do Bigger Companies Get Higher Multiples?
Private equity firms care about cash flow and deal size. Larger businesses create stronger, more predictable cash flow streams, making them safer investments. Additionally, bigger deals mean more fees and upside for the private equity partners and associates involved. The time and effort required to buy a $1M EBITDA company isn’t much different from acquiring a $5M EBITDA company—but the latter moves the needle significantly more for the fund.
How to Make Your Business More Appealing
If you want to attract private equity, focus on what matters to them:
Consistent, recurring revenue – Subscription models, service contracts, and preventative maintenance agreements make your cash flow more predictable.
Strong leadership team – If your business falls apart without you, it’s a red flag. Build a team that can operate independently. This applies more to field management than your executives. Don’t skimp on technician training and field management.
Operational efficiency – Investors love businesses that run on systems, not personality. Document SOPs, optimize processes, and clean up your financials.
Brand and market position – A business with a strong brand and customer loyalty is more valuable than one that competes solely on price.
Growth potential – Show a clear path to expansion. Whether it’s through acquisitions, new service lines, or untapped markets, demonstrate how the business can scale.
Final Thought
If you own a service business and want to sell in the next few years, start preparing now. Private equity firms want what you have, but you need to position your company correctly. Get your financials in order, build a business that runs without you, and make sure your revenue is as predictable as possible.
When the time comes, you’ll have options.
If you are thinking of selling your company and want to discuss it, get on my calendar below. I’m happy to spend 30 minutes with you and let you know what I think.
We’re Headed Toward a Landlord-Friendly Era. Expect Higher Rent Prices.
Summary: The decline in apartment rents appears to be nearing its end, with a rental market shift favoring landlords expected later in 2025. High mortgage rates and the unaffordability of homeownership are resulting in longer rental periods, increasing demand for rental properties.
New constructions, particularly in Sunbelt markets, have led to an oversupply, but this excess is anticipated to diminish by year-end, causing rents to rise. As a result, rents have already begun increasing in regions with limited new supply such as the Midwest, Northeast, and parts of the West Coast. Higher rents could complicate the Federal Reserve’s efforts to manage inflation, as housing costs significantly impact the consumer-price index.
While new apartment construction is tapering off, rental demand remains high, leading to competitive rental markets. This shift presents challenges for tenants and may put pressure on government officials to address housing affordability. Investors are optimistic about prospects in the Sunbelt region, anticipating a rebound in rent growth in 2025 and beyond.
Keith’s Take: Looks like the days of scoring a rental bargain are fading fast. With homeownership slipping further out of reach thanks to high mortgage rates, more folks are sticking to renting, which is driving up demand.
Even with a flurry of new apartments, especially down in the Sunbelt, the surplus won’t last long. Landlords are gearing up to hike rents, and tenants might need to brace themselves—and their wallets—for what’s coming.
This trend could also throw a wrench in the Fed’s battle against inflation, as rising housing costs ripple through the economy. It’s a tough break for renters, and policymakers might need to step in before things get out of hand.
Full Story: The Wall Street Journal
Wealthy New Yorkers flock to Palm Beach, causing house prices to skyrocket: ‘Supercharged migration’
Summary: The influx of wealthy New Yorkers into Palm Beach, Florida, has dramatically reshaped the local real estate landscape. This migration, which gained momentum during the COVID-19 pandemic, has led to a surge in home prices and a significant reduction in available inventory.
The median home price in Palm Beach skyrocketed to $4.15 million in April 2022 and, despite a slight decrease since then, remains well above pre-pandemic levels. By 2023, nearly 20% of Palm Beach County’s property listing views originated from New York, underscoring the sustained interest from Northeastern buyers. This trend has not only escalated property values but also transformed the region’s demographic and economic fabric.
Keith’s Take: Who would’ve thought that a global pandemic would turn Palm Beach into New York’s sixth borough?
The migration of affluent New Yorkers has sent property prices through the roof, with the median hitting a staggering $4.15 million at one point. While some locals might be cashing in, this surge raises questions about affordability and the long-term impact on the community.
It’s a classic case of supply and demand, but with a twist of cultural shift. As more Northeasterners set up shop in sunny Florida, it’ll be interesting to see how this blend of lifestyles shapes the future of Palm Beach.
Full Story: New York Post
Mortgage rates dip to lowest level of 2025, lifting hopes for spring home-buying season
Summary: The U.S. housing market is showing signs of a spring revival after two tough years. Existing-home sales are projected to rise, with the National Association of Realtors anticipating a 12% increase, while Fannie Mae estimates a more modest 2.3% uptick.
A key factor in this recovery is the recent decline in mortgage rates, which have dipped to their lowest levels since December 2024, with the average 30-year fixed-rate mortgage now at 6.87%. This downward trend is fostering cautious optimism among buyers and real estate professionals as the busy spring season approaches.
Keith’s Take: It’s about time we saw some positive momentum in the housing market. After a couple of years in the doldrums, a projected rise in home sales is a welcome change. But let’s not get ahead of ourselves—while a 12% increase sounds impressive, Fannie Mae’s more conservative 2.3% projection reminds us to stay grounded.
The dip in mortgage rates to 6.87% is a step in the right direction, but it’s still a far cry from the rock-bottom rates we saw a few years back. Buyers are adjusting, but affordability remains a hurdle. As we head into the spring season, it’ll be interesting to see if this momentum holds or if we’re in for another rollercoaster ride.
Full Story: Barron’s, MarketWatch
About Keith Bloemendaal
With over 36 years in construction, I’ve built businesses from scratch—some scaled to millions, others taught me the hard lessons. Now, I help contractors work smarter with practical strategies and tech solutions that save time, cut headaches, and boost profits.
When I’m not solving problems or testing new ideas, you’ll find me sharing stories and mentoring hardworking pros like you.
Connect with me:
𝕏 @ContractorKeith
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