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Tim Mulrooney, an analyst with investment firm William Blair, just published a white paper on the residential services segment. In the report, Mulrooney shared that he believes the sector will experience strong growth over the next decade due to accelerating end-market dynamics and evolving consumer behavior.
William Blair segments the consumer services vertical between services that are performed at the home (residential interior/exterior services) and away from the home (e.g., car wash, auto services, health and wellness). This report focuses on the residential services vertical, which includes many large, highly fragmented markets such as pest control; landscaping; lawn care; heating, ventilation, and air conditioning (HVAC); electrical and plumbing; moving and storage; pool services; roofing services; renovation; home restoration; and other interior and exterior services.
Although there are very few publicly traded companies servicing these end-markets today, William Blair expects that this dynamic will change over the next several years. Private equity and other financial sponsors, drawn in by favorable investment characteristics, continue to consolidate these large, highly fragmented markets. William Blair expects institutional investors to take a similar level of interest as many of the larger platforms consider a public exit.
Mulrooney noted that investment in the residential services sector is being fueled by attractive secular tailwinds, accelerating end-market dynamics, and evolving consumer behavior. Against this backdrop, the residential services industry will experience strong growth over the next decade, in our opinion, he said. Moreover, William Blair believes that investors in both the public and private equity markets will achieve superior long-term returns by identifying and investing in strong platforms in these industries, many of which are redefining the marketing strategies, customer experience, and levels of technician engagement, and are capturing outsized market share in the process.
The purpose of this report is to assist investors in this process.