HVAC M&A Sector Update, HARDI ‘Navigate’ Conference Recap, Industry Interviews & Market Data | Winter 2025

Navigate’s keynote economic outlook session highlighted improving market conditions for most HVAC channels and expected more upside for 2025, offsetting some lingering pockets of softness, particularly in new construction markets. With inflation steady and interest rates trending lower, market conditions suggest low single-digit – but positive! – sales growth, compared to the last few years of overall declines.

Because recent macro data suggests positive trends for the HVAC industry, a clear theme emerged throughout the conference – be proactive! Don’t simply rely on the market environment. Rather, focus on your customer base and how to upsell them in order to drive more business. Numerous HARDI workshops explored targeted ideas for how to better drive contractor engagement and sales. Interesting takeaways included:

A key focus for our CMG team as M&A advisors for family-owned and founder-led businesses includes succession planning and M&A. Both topics tend to be scary to business owners, so it was nice to see packed conference rooms for events tackling these topics.

M&A is obviously the other side of the succession- planning and was discussed openly at the conference. As far as the current landscape, here are some of our observations:

Carter Morse & Goodrich recently interviewed Eric Ancarrow, Vice President of Business Development at Ferguson (NYSE: FERG). Eric’s responsibilities include developing relationships with independently-owned distributors for the purpose of sourcing and executing strategic M&A opportunities. At $40 billion of total enterprise value, Ferguson stands as the largest value-added distributor in the North American residential and non-residential construction market, providing a broad portfolio of products and services that includes plumbing, HVAC and building products, among others.

In your role leading M&A initiatives for Ferguson, how do you think about acquisitions as a complement to organic growth? Historically, Ferguson has been a very active acquirer—11 deals last year alone, which some might even call a slow year. How does M&A fit into the broader strategy and culture of the organization?

Acquisitions have been part of Ferguson’s growth algorithm for nearly 30 years – in that time we have completed over 300 transactions. This inorganic growth has allowed us to not only expand geographically, but enter into new verticals including HVAC, Waterworks, Fire Protection and digital commerce. M&A is embedded in our culture with over 15% of our current associate base, including our CEO, coming to the company through acquisition. We target 1-3% annualized incremental revenue growth through M&A, and work closely with our business leaders to ensure our M&A strategy aligns with our customer group and broader corporate strategy.

How does your current M&A pipeline look, and could you share any high-level initiatives or trends you’re focusing on? What’s your perspective on the overall market for sellers in the HVAC sector compared to the broader plumbing and building products sectors right now?

Our pipeline has remained robust even as 2024 has been seen more broadly as a slower year for transaction volumes. We operate in highly fragmented markets across all of our customer groups and anticipate continued consolidation for years to come.

While Ferguson continues to invest in M&A across all our verticals, we have been most active in the HVAC and Waterworks space. We believe Ferguson is best positioned to serve the dual trade contractor through our HVAC and Plumbing network and believe the consolidation we have seen in the HVAC service and contractor markets will create further opportunity to grow with this customer. We have also been diversifying our Waterworks business through M&A, investing in areas like erosion control, stormwater management, metering and technologies and plant work.

Many of our family- and founder-led clients hear pitches from private equity, touting continued independence, legacy preservation, and a chance to remain deeply involved. Why should these sellers consider Ferguson as a potential partner instead?

Ferguson very much values the heritage and legacy of an independently owned wholesaler. Our industry is dominated by family-owned, multi-generational businesses with active family members still leading the business. We recognize a potential sale is an incredibly tough, and emotional decision when determining who the family would like to partner with moving forward.

Often times a sale represents a full exit of the business for the family, but just as often we are working with Seller’s who wish to remain involved. Having leadership stay on post-close is invaluable, providing stability to the business, associates and customers and helping us build on what has already made that company successful. We very much value the entrepreneurial spirit and passion of the owners and their teams, and look to leverage throughout our business.

We acquire companies that have a strong value-set match with Ferguson and our acquisition model is one of investing in the company and the associates to fuel growth – giving them access to expanded product categories and helping them to leverage our national scale using their local relationships. The focus for us, from an integration perspective, is on bringing those associates into the Ferguson family, on opening up new career opportunities for them, and then bringing the capabilities that we offer as a $30 billion organization to those associates and to their customers.

We hope seller’s see that as an attractive value proposition and one in which they are best setting their employees up to succeed.

Given your experience, what advice would you give to family and founder-led businesses considering an M&A transaction—particularly around preparation and positioning for the right partner?

There are a lot of fundamental considerations a Seller needs to address. While that starts with understanding the goals for the family and shareholders, you’ll want to work close with an advisory team around more complex issues such as tax, legal and estate planning.

As you think about positioning the company for sale, the best advice I could give would be to invest in your people and position them to grow. It’s the people and the relationships that are the most important asset in any acquisition and the largest value driver to a strategic acquirer.

CMG advises Arista Air Conditioning in its sale to a Confidential Strategic Buyer

Founded in New York City more than 75-years ago, Arista has grown into one of the largest independent HVAC contractors for service, repair, maintenance, and retrofit installation, serving customers throughout NYC’s five boroughs, Long Island, Westchester and New Jersey. The name “Arista” means “the best” in Greek, and true to its name, the Company built a stellar reputation as the preferred partner for a prestigious and diverse client base in both commercial and high-end residential markets with its fleet of 100+ vehicles and service technicians.

Arista is a second-generation family-owned business. Stanley Berger, representing the family’s first generation, originally served as Arista’s accountant, and purchased the Company in 1973. Stanley immediately began expanding Arista’s service offerings and footprint and soon welcomed his children to join the business. Stanley’s son Scott took over as President in 2004 and continued his legacy of industry leadership. In 2024, the Berger family decided to explore strategic options to determine the next chapter in Arista’s legacy and partnered with CMG and a team of other transaction professional.

After fielding numerous inquiries from interested buyers over the years, Arista engaged CMG to conduct a strategic options analysis for the Company to help the Berger family decide whether to explore a sale. Following the outcome of CMG’s analysis, Arista mandated CMG to conduct a targeted M&A sale process for the Company. A large confidential HVAC corporation, seeking to enhance its service capabilities and expand its reach in the Northeast, emerged as the best fit to continue the Company’s legacy of excellence and successfully acquired Arista.

Owner’s Perspectives 

Scott Berger, Arista’s President, commented, “At first, I was skeptical about hiring an investment banker for our sale, since strategic parties had already approached me about a transaction. But after meeting the Carter Morse team and witnessing their M&A expertise, knowledge of the HVAC space, and direct connections to buyers interested in Arista, I knew they were the right partner for us. From that point on, they proved I had made the right choice. They supported us at each turn and truly cared about every detail of my family’s business, doing whatever it took to make this a successful transaction for us. I can’t recommend them highly enough.”