96% of home service companies never cross $1M

Hey there,

On April 18th, I spoke at Fuse Club conference in San Jose.

I talked about what I've believed for over 15 years, and what I think about every day while building Home Alliance.

Home services isn't about fixing refrigerators.

It's a hundreds-of-billions-dollar industry where Blackstone, KKR, and Alpine Investors are already playing.

And most contractors have no idea what's happening.

The numbers tell the story

Over $15 billion in institutional capital has flowed into home services since 2020 alone.

Private equity firms are buying HVAC companies, plumbing businesses, electrical contractors, and consolidating them into platforms.

The consolidation wave isn't coming. It's already here.

And yet 96% of companies in this space never cross $1M in revenue.

Not because the market is bad. Because there's no system.

Why private equity is pouring billions in

Three macro trends are converging:

AI is replacing white-collar workers. ChatGPT can write code, analyze data, draft documents. But it can't fix your AC or install plumbing. Trades can't be automated.

Demand for hands-on services is growing. The industry is short 600,000 factory workers and 500,000 construction workers. That gap is widening.

Fragmentation creates opportunity. 96% of companies never cross $1M. Thousands of small operators with no systems. Private equity sees consolidation opportunity.

Buy the best operators. Plug them into shared infrastructure. Scale through M&A.

That's why $15 billion has flowed in since 2020.

The infrastructure gap

Here's what most contractors miss:

Private equity isn't buying you for current revenue. They're buying potential revenue under better infrastructure.

A $3M standalone HVAC company sells for 2x-3x revenue.

Plug that same company into a platform with shared back office, centralized marketing, training infrastructure, and technology stack?

Now it's worth 10x-12x revenue.

Same business. 10x valuation difference.

Why? Standalone businesses are risky. Platforms are predictable.

Most contractors think they're in the repair business.

They're not. They're in the infrastructure business.

What this means for you

Under $1M: You have two choices… stay small and serve your local market, or build infrastructure and prepare for scale.

$1M-$5M: You're in the danger zone. Big enough for real overhead. Not big enough for real infrastructure. You need to build platform systems, partner with a platform, or accept the ceiling.

$5M+: Infrastructure isn't optional. It's survival. The operators who win build the best systems, not just do the best work.

The three infrastructure plays that matter

Play 1: Talent creation

Everyone competes for talent. Winners create it.

We built Home Alliance Academy. Trained 1,000+ technicians. Online, self-paced, 3-6 months, paid while learning. Zero debt.

Traditional trade path: $20K–$50K in tuition and 1–2 years before you’re fully earning.

Our model: $0 upfront, 3–6 months to competency, and you get paid while you learn.

Play 2: Affordable technology

Enterprise systems cost $150-$300/month. Most contractors can't justify that.

We built Home Alliance Phone for $16/month. Same call tracking. Same analytics. Grant-supported pricing.

Play 3: Platform economics

We didn't stay in HVAC. We added plumbing, electrical, membership, Phone, Academy licensing.

Each revenue stream compounds the others. When one slows, the platform holds.

That's what PE is paying for. Not your current business. Your platform potential.

What to do next

The consolidation is happening whether you're ready or not.

Make yourself either an attractive acquisition target (systems in place, not just revenue) or a platform acquirer (infrastructure ready to absorb others).

If you want to stay independent, accept you're competing against billion-dollar platforms. You can still win locally, but you need infrastructure to survive.

The choice:

Build infrastructure or get acquired by someone who did.

That's it for today.

Talk soon,

Sardor