Private Equity Investment in Residential Services: Succeeding in a Changing Market

Essential services – from HVAC and plumbing to pest control and waste management – have become one of private equity’s most active and durable investment frontiers. With a $650 billion market size and nearly 10% annual growth, this category offers both resilience and reinvention. More than 80% of operators are still small, regional, and founder-led, creating opportunity for scale and modernization across regions.

West Monroe has a front-row seat to this evolution. We’re partnering with private equity investors and management teams to identify value, modernize technology and operations, and integrate newly acquired companies into residential services platforms. From diligence through platform integration, we see firsthand where the opportunity lies, how investors are rethinking the playbook, and what it takes to succeed residential services investing.

We’ve combined market data with our experience advising hundreds of investors and operators in this space to outline what drives success. We break down:

1. The market fundamentals shaping investment strategy.
2. The operational and digital capabilities defining top-performing platforms.
3. The people and productivity levers turning scale into sustained value.

Residential Services: A Market Built for Value Creation

Essential services are fitting for private equity value creation: fragmented ownership, steady demand, and operational upside. But we see the smartest investors go beyond the old playbook of “buy and bundle.”

To succeed in this sector, financial investors need to align capital, technology, and workforce enablement behind three core levers:

1. Scaling platforms with discipline, not just volume.
2. Digitizing frontline operations to unlock productivity.
3. Building resilient workforces as a growth engine, not a constraint.

Essential services businesses offer the kind of stability and scale PE firms look for—without the cyclical exposure of other industries. While software investments offers annual recuring revenue, growth has slowed as AI-native models disrupt traditional SaaS economics. The services economy, on the other hand, runs on a different kind of engine: consistent, non-discretionary demand and large, fragmented markets where modernized technology and discipline can general real, measurable gains.

Key characteristics defining the residential services opportunity for financial investors:

• Resilient demand. Essential services generate sticky revenue through urgent, often non-discretionary needs.
• Fragmented structure. More than 80% of operators remain founder-led, creating textbook roll-up conditions and opportunity for professionalization.
• Aging infrastructure. The median U.S. home is now over 40 years old, driving long-term demand for repair, maintenance, and replacement.
• Investor focus. Facility services broadly—from landscaping to janitorial—are drawing PE attention for similar reasons: fragmentation, predictability, and scalability (TM Capital 2024 Facility Services Report).

Deal Dynamics: Momentum Meets Complexity for Residential Services M&A

Private equity investment in residential and essential services has accelerated rapidly—and matured in the process. Deal volume nearly doubled between 2018 and 2022, dipped briefly in 2023 amid higher interest rates and labor shortages, and rebounded to new highs in 2024. Through mid-2025, the market remains active, signaling that investors see continued runway for growth and consolidation.

But deal activity tells only part of the story. The shift underway is from deal volume to value creation—from assembling assets to operating them with precision. Investors are applying more rigor to integration, technology enablement, and workforce productivity to unlock scale without sacrificing margins or customer experience.

West Monroe’s work in this sector reflects that shift: investors are asking tougher questions about operational maturity during diligence and prioritizing digital readiness and workforce models post-close. Many now view margin expansion as dependent less on volume of deals and more on execution excellence from the deals already done.

Three dynamics that have shaped recent residential services investment landscape:

• Labor shortages. The HVAC industry alone faces more than 480,000 unfilled jobs, with demand expected to grow 6% in the next decade. Technician demand continues to outpace trade school output. These shortages can delay growth plans for even well-capitalized platforms.
• Technology underinvestment. Many operators still rely on manual workflows. Firms investing in scheduling, quoting, and CRM systems are achieving faster integration and stronger EBITDA expansion.
• Capital discipline. Investors are focusing on bolt-on integrations that strengthen regional networks rather than chasing national footprints too quickly.

The momentum in residential services investment has continued into 2025: Q1 saw 681 deals, with volume rising 3% sequentially by Q2. Dealmaking in HVAC, pest control, and landscaping remain central. Notably, recent landscaping deals have exceeded $150 million, reflecting the capital-intensive nature of building scaled platforms.

What’s changed is how value is created. Investors are no longer chasing deals for volume alone. The leaders are distinguishing themselves through disciplined execution and smarter operations—treating every acquisition as an opportunity to modernize, not just expand.

Scale is no longer about size—it’s about sophistication:

• Customer experience as a differentiator. Winning platforms are the ones that get the first call and keep the customer for life, driven by fast quoting, consistent follow-up, and technician reliability.
• Technology as the core operating system. Too many operators still run on manual processes. Platforms that digitize scheduling, quoting, payments, and CRM see immediate gains in margin and customer satisfaction.
• Standardization as the fuel for integration and scale. Repeatable integration playbooks and data-driven processes allow firms to consolidate quickly without losing local brand equity.

Many companies still rely on manual workflows, but implementing digital tools like scheduling and data integration can unlock rapid growth. Technology isn’t just a back-office fix—it’s a strategic lever for transformation in this industry.

"Residential and essential services remain a relatively nascent investment category. Scale doesn’t happen overnight in labor-based businesses, so unlike sectors that have benefited from decades of institutional capital, this space is still early in its maturation. And the macro tailwinds—electrification, AI, modernization, and climate change—provide massive runway for continued growth without the constraints of limited market size.”

– Paul Majeski, Senior Managing Director at Guggenheim

Where Value Exists in Residential Services Companies: Digital, AI, and Workforce Transformation

Private equity’s role in essential services has evolved from assembling portfolios to activating performance. In a market defined by recurring demand but operational complexity, value creation now depends on how effectively investors modernize technology, empower people, and measure progress.

West Monroe’s Take: Compete on Execution, Not Exposure

This sector’s fundamentals—recession-resistance, and predictable revenue, and runway for consolidation—are well-known. But we see certain firms pulling ahead, and that’s because they are scaling with discipline. In particular

• Platform performance varies: The real differentiator is how well platforms can scale, not just in size, but in sophistication.
• Moving beyond roll-ups: Investors are evolving past basic add-on models in favor of focused growth strategies built around customer experience, efficiency, and data.
• Customer experience is king: The best platforms are the ones that get the first call and keep the customer for life. That means fast quoting, consistent follow-up, and technician reliability.

In short, the opportunity isn’t about owning the most—it’s about operating the best.

Technology as a New Operating Model

Technology maturity is emerging as the single biggest driver of differentiation—in both diligence and value creation. Many companies still operate with manual systems, leaving opportunities for rapid improvement or pitfalls if left unaddressed.

Core digitization for essential services companies includes:

• Job quoting and proposals
• Dispatching and route optimization
• Real-time scheduling
• Mobile invoicing and payments
• CRM integration and customer follow-up

And AI is in its infancy here. Early-stage applications are being piloted for things like technician dispatch optimization and demand forecasting, but there is far more runway for advanced interaction. Investors are pushing for early standardization of systems and data to prevent painful re-platforming later. Firms that show up with a digital plan and AI-enabled playbook are already commanding stronger multiples and faster exits.

Spotlight: Finding $8.5M in Value—Before the Ink Dried

A private equity firm turned to West Monroe for an edge in a competitive acquisition of a national HVAC and plumbing platform. By applying proprietary data science tools and AI-enabled diligence, our team uncovered $8.5 million in digital growth potential across marketing, booking, operations, and workforce efficiency. The analysis fed directly into the client’s bid model—supporting a 4% EBITDA margin expansion and helping them win the deal with conviction and a post-close roadmap already in hand.

Workforce Enablement: The Growth Multiplier

Labor remains the industry’s most persistent toughest challenge. Technician shortages, demographic shifts, and limited trade school enrollment continue to pressure operators. But firms that invest in people are breaking through.

Platforms that invest in workforce enablement are gaining an edge:

• Accelerated onboarding and training: Reduce ramp times and improve retention.
• Productivity tools: Equip technicians with mobile dashboards, routing apps, and upsell prompts to increase revenue per technician.
• Smarter hiring models: Hire for aptitude and culture, not just credentials.

“The most effective companies are those who recruit, develop, and retain talent in a unique way—whether that’s branch leadership training or a stronger go-to-market motion.”

– Andy Miller, Senior Managing Director at Guggenheim

The Path Forward: What Sets Top PE Investors Apart in Residential Services

Essential services are undergoing a structural shift—where scale alone no longer defines success. The investors creating the most value are those executing with precision: integrating faster, digitizing deeper, and empowering their workforces to do more.

Deal activity trends confirm it: investors are moving beyond volume toward operational excellence. The differentiators are clear—disciplined integration, technology adoption that modernizes the frontline, and workforce enablement that addresses the industry’s most persistent bottleneck.

Based on our work with leading private equity firms, five priorities consistently set outperformers apart:

1. Digitize the Core Process – Automate quoting, routing, scheduling, and invoicing to drive speed and accuracy.
2. Centralize the Data – Build unified systems for AI, reporting, and faster integration.
3. Invest in Workforce Capacity – Treat technician enablement as a growth driver, not a cost center.
4. Standardize for Scale – Apply integration playbooks that create consistency without losing local trust.
5. Bring Discipline to Marketing and Pricing – Use analytics to sharpen lead generation, pricing, and territory planning.

At West Monroe, we’re partnering with investors who want to do more than build platforms—they want to build performance. The next decade of essential services won’t be defined by who buys the most, but by who executes the best.