Private Equity Companies are Buying Locally Owned HVAC Companies

It’s no secret that Northeast Ohio is a densely populated area when it comes to family owned businesses, especially in the trades. Over the past decade or so, more and more large scale operations have entered the market and begun attempting to buy up family owned businesses because of their lucrative potential for high return on investment. These “large scale operations” are known as “Private Equity Firms.”

A private equity firm is an investment group that draws money together from high-net-worth people and organizations to buy and invest in companies. These groups typically acquire businesses with the goal of growing them substantially over the course of several years and then selling them for a profit. The trend in private equity firms buying up local companies has begun to raise some flags amongst consumers about the potential impact of losing family owned businesses to large scale corporations.

Once a private equity firm acquires a company, it typically works with management to make strategic changes and investemnts to improve the company’s performance. These changes typically include finding ways to increase efficiency, expanding the business into new markets or completely restructuring operations.

For family owned businesses, selling to a private equity company could be an attractive option. In some cases, it can provide the owners access to additional spending money and expertise to grow their businesses along with options to cash out of their companies and retire; however, there are also potential downsides to selling to a private equity firm as well.

One of the biggest concerns about private equity ownership is the potential impact on customer service and relationships. Private equity firms are typically focused on maximizing businesses for profit, not necessarily on providing the highest quality services to their customers. This can lead to more of a “short-term gains” mentality vs the typical mentality of a locally owned company which is focused on long term customer relationships.