Is the HVAC Industry is Poised for Explosive Growth?

Last year saw high-volume M&A activity for the HVAC industry. By August 2021, the HVAC equipment industry announced 102 deals closed, which was a 96.2% increase over 2020 and a 92.5% increase over 2019. By the second quarter of last year, the HVAC services industry reached 90 transactions–an 87.5% year-over-year increase.

Globally, the HVAC systems industry is poised to carry out this trend of explosive growth. Worldwide demand is estimated to increase from $130.4 billion in 2019 to $208.5 billion in 2027, growing at a CAGR of 6.1%. Asian Pacific countries are expected to fuel the bulk of demand, due to growing wealth and new construction.

In the United States, all segments of the HVAC industry are expecting continued

and steady growth. Sales for U.S. HVAC equipment manufacturers are forecast to

grow at a CAGR of 4.21% from 2020 to 2025. HVAC distributors should see sales grow at a CAGR of 5.64% over the same period. And HVAC contractors are forecast to grow at a 6.55% CAGR from 2020 to 2025.

Are you looking to grow or sell your HVAC business?

At Raincatcher, we stay ahead of M&A trends to give our clients the most accurate picture of any market. With the HVAC industry, we’ve found that strategic buyers drove the majority of deals. In particular, successful M&A deals were driven by HVAC business owners looking to expand services, acquire new technologies, and meet growing consumer demands were the main drivers of these deals.

Raincatcher also has an in-house HVAC entrepreneur, Susan Frew. Susan heads Raincatcher’s business growth department and has firsthand experience in this industry as a business owner who has consistently stayed on top of HVAC industry trends in order to keep her business thriving.

An Industry Primed for Growth

The HVAC market value in North America is estimated at $13.8B.

  • Due to changes in climate and growing public concern over air quality, along with energy efficiency, there will be a growing demand for climate control systems like HVAC.

  • On the basis of forwarding 12-month price to earnings, which is a commonly used multiple for valuing Air Conditioner and Heating stocks, the industry is currently trading at 38.7X versus the S&P 500’s 22.9X and the sector’s 17.2X.

  • As a part of the COVID-19 stimulus package signed into law in December 2020. $82 BN in funding for ventilation and air quality improvements is being given to elementary and secondary schools in the US.

  • The estimated figure for connected devices for HVAC purposes sold is expected to more than double by 2022 and more than triple by 2025, highlighting the rapid growth in this sector.


M&A Industry Opportunities

Given the explosive growth and consolidation within the HVAC industry, there are 3 major M&A opportunities for both buyers and sellers.


  1. ​​Original Equipment Manufacturers–Large brands like Rheem and Daikin dominate this already highly consolidated space. Much of the M&A activity at this level involves OEMs acquiring distributors as well as adjacent technology providers.

  2. Distributors–There’s more room for consolidation at the distributor level. OEMs are buying distributors to gain greater control of the supply chain, and larger distributors are acquiring regional players to expand market share and territory.

  3. Installation and Service Providers–The industry is still highly fragmented at the service provider level, with more small, local players than large national ones. This is likely the area with the most potential for M&A activity going forward.


Are You Ready to Sell, Enter, or Grow Your HVAC Business?

Raincatcher is a leader in HVAC M&A strategy and deals. If you think you’re ready to capitalize on this growing $130 billion dollar industry, contact us for a free valuation.

Interested in learning more about this growing industry? Download our free State of the HVAC Industry Report here.

Would you like to talk to Susan Frew, HVAC entrepreneur and Raincatcher Director of Business Growth? She'd love to hear from you. Email Susan today.

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