We found this little tidbit buried in an industry trade publication very interesting. It’s an announcement that private equity player Intermediate Capital Group (ICG) has invested in a New York-based HVAC company called Gil-Bar Industries. Gil-Bar appears to be a leading provider of HVAC solutions in the Tri-state area.
Why do we think this is interesting, you might ask? Well, we think it a signal of things to come in the local space. After all, HVAC is about as local as it gets. Granted that Gil-Bar is much bigger than most people’s image of the one-truck HVAC guy who rolls out of bed and handles whatever residential crisis arises that day. Yet it’s still very interesting to us that a company like Gil-Bar is searching for scale. That’s how the company plans to use its new capital investment from ICG.
Here’s what Joe Sbarra (no relation to the pizza joint) Gil-Bar’s founding partner at Gil-Bar had to say. “We are very pleased to partner with ICG as we move into the next phase of Gil-Bar’s evolution. Gil-Bar is well-positioned for the future, and with ICG’s capital and experience, I am excited about what we can achieve together.”
Shedding Its Blue-Collar Image
Seems like Gil-Bar is on an acquisition path. For example, it acquired a company called GBS Limited last year. To us, this also suggests that HVAC — once firmly in the blue-collar domain — is moving into the age of technology.
Twenty years ago an HVAC operator cared more about making sure the heating ducts were clean. Today an HVAC operator is likely more concerned with making sure the sensors on the A/C unit are sending the right signals so that they can proactively address any maintenance situations that arise. This means that a mix of blue and white-collar employees will be necessary for a company like Gil-Bar to succeed.
We’d expect Gil-Bar to be looking for additional opportunities for geographic expansion in the greater Northeast. What does that mean for local operators? We think it means that they should be implementing as much new technology as possible for running the business in order to be in the consideration set for a company like Gil-Bar or others going in the same direction.
For a long time, we’ve predicted a massive turnover in the leadership of local service businesses. After all, an entire generation – the Baby Boomers – is contemplating retirement. Getting ready for this transition has got to be a pressing concern for many local service providers. From the town dentist to the HVAC provider to the dry cleaner.
We continue to believe that upgrading a business’s technology stack will yield a better return when it’s time to sell. And the data suggests that some local service providers might finally be clued in to the same belief. It will be interesting to see if other local service sectors follow the path of at least this one New York HVAC provider.