Recruitment season is roaring once again, and if you find yourself rushing to polish your CVs, revise and redraft those cover letters, obsessing over every detail (only to find a typo after the 15th look-over), you’re not alone. In the flurry of research and interviews, it’s sometimes easy to lose sight of what investment banking, private equity, and hedge funds actually do. Take private equity (PE) as an example. Surely, we all know what PE is all about and a standard definition would be something along the lines of “Private equity firms buy companies and overhaul them to earn a profit when the business is sold again.” However, reading an actual case study can be far more illuminating than relying on sanitized bullet points or arcane job descriptions.

The Wall Street Journal published a piece that showcases exactly how PE operations play out in the real world—this time, in the often-overlooked world of plumbing, heating, and air-conditioning (HVAC) businesses. It’s a fascinating glimpse at the benefits PE can bring to an industry that keeps homes comfortable and healthy.

The Real-World Example: Redwood and Rite Way

In Tucson, Arizona, Redwood Services, a company backed by private equity, has been on a mission to acquire local, often family-run HVAC and plumbing outfits to build a more streamlined, profitable empire. According to The Wall Street Journal, Redwood “has acquired 35 companies in the past four years,” ranging from smaller outfits bought outright for about $1 million to larger local fixtures with valuations in the $20 million range.

These acquisitions aren’t just about feeding some nebulous corporate bottom line. They bring tangible results in the form of expanded services, increased staffing and apprenticeships, and shared managerial expertise. For example, Rite Way, a Tucson-based HVAC operation that Redwood had already acquired, purchased smaller shops so it could branch into plumbing and electrical services.By injecting capital into recruitment and training, Redwood could “tap a wider customer base” and develop an “apprenticeship program to train new workers.” Many small-business owners are skilled in their craft but may not have time to optimize “back-office efficiency and beefed-up marketing,” as the article notes. PE firms can provide exactly those resources.

The result? Rite Way’s revenue “has gone from $30 million in annual revenue to around $70 million” in just a few years.

Why This Matters: Benefits of PE for Small Businesses

Stories like this emphasize how PE can help accelerate growth for businesses that have plateaued or are looking for a leg up against competitors. Here’s why:]

Access to Capital
Small businesses often operate under capital constraints. PE firms can invest heavily in equipment, technology upgrades, or geographic expansion—moves that many small-business owners simply can’t fund on their own.

Operational Expertise
As Redwood CEO Richard Lewis explains, many founders “are often too busy to juggle an array of tasks.” PE-backed firms come in with accountants, strategists, and managers who ensure that pricing, inventory, and service offerings are all aligned with market demands.

Stronger Market Position
By rolling up multiple shops under one umbrella, PE firms increase purchasing power with suppliers (better deals on HVAC units or plumbing supplies). They can also standardize branding, marketing, and sales practices to reach more customers.

Employee Opportunities
Contrary to popular fears of “slash and burn” takeovers, many PE acquisitions in the skilled trades appear to boost wages and offer new career paths. Graham Weaver, founder of Alpine Investors, told The Wall Street Journal that technicians can see a “20% pay bump in the first year” post-acquisition from wages, bonuses, and commissions.

The Human Side of PE: Owners Who Stay In

Another interesting shift in this wave of PE deals is that owners are choosing to stay on rather than head out to a well-earned retirement. The Wall Street Journal suggests that around one-third of owners want to remain at their companies, driving expansion under the new ownership structure. A case in point is Aaron Rice, co-founder of a plumbing company in Tucson, sold to Redwood but stayed on to manage the sewer department. Far from feeling like a corporate pawn, Rice appreciates the security and growth potential: “Selling his company has given him greater peace of mind for his family,” the article points out. Rick Walter, who founded Rite Way, sold a majority stake to Redwood yet kept a 25% share. In the article, he recounts how Redwood’s management support “took a lot of stress out of the business.” This model—called a “majority recap”—is increasingly common. Rather than hand over the entire business, founders stay involved, retain some equity, and collaborate with professionals who can help them expand in a way they couldn’t alone.

Addressing Potential Downsides

Of course, not all is perfect in the world of private equity:

• Higher Prices
  Some critics argue that the roll-up model leads to less competition and potentially higher prices for consumers. PE ownership often adjusts costs “on a quarterly basis to ensure they are in line with the market,” and any spike in input costs—“if the cost of a screw goes up,” says Redwood’s CEO—gets passed on to the customer.
• Cultural Shifts
  Technicians in certain forums complain about new pushy sales tactics, where they’re “pressured to make sales rather than do real repair work.” Such complaints highlight the cultural clash between a small, family-run business ethos and a profit-driven model.
• Uncertain Job Security
  While many employees may thrive in a better-resourced company, there’s always the risk that a PE firm with a short investment horizon could eventually flip the business to new owners, bringing unpredictable changes.
  
  Still, it’s hard to ignore the benefits to owners and workers who find themselves backed by a strong financial partner. One longtime HVAC entrepreneur, quoted in the article, explained that with so many outside buyers offering “seven-figure and eight-figure paydays,” local owners might find it impossible to compete with well-funded rivals if they don’t partner with PE.

Key Takeaways

1. Capital Infusion – Private equity can provide the much-needed funds to buy equipment, expand service lines, and hire new talent.
2. Strategic Resources – Marketing, pricing reviews, and professional back-office support streamline operations, lifting a company’s bottom line.
3. Win-Win for Owners – Many founders are choosing partial buyouts, retaining a stake while gaining the means to grow faster.
4. Potential for Employees – Larger budgets for training and higher wages can attract top-tier talent, improving service and customer satisfaction.
5. Cautious Optimism – As with any form of consolidation, there are risks: higher consumer prices, possible cultural clashes, and uncertain long-term ownership.

The WSJ story on private equity’s invasion of home services—plumbing, HVAC, and electrical—perfectly illustrates the practical side of this often-misunderstood corner of the financial world. Yes, private equity aims to generate returns for its investors, but the day-to-day reality for small business owners can be surprisingly positive: capital, new resources, and a chance to grow in ways they might have only dreamed about before.

For candidates looking to make sense of the difference between investment banking, private equity, and hedge funds, remember that PE’s bread and butter is working within the companies they own—improving operations, boosting revenue, and eventually selling or recapitalizing at a profit. If you want to see the so-called “plumbing” of financial deals quite literally affecting plumbers on the ground, you don’t have to look much further than stories like these.