The HVAC acquisition market in 2026.
What you need to know about valuations, buyers, and the forces shaping the sector.
Update, November 2026. The October 2026 Budget announced that the Business Asset Disposal Relief lifetime limit will fall from £1 million to £500,000 for qualifying disposals from the start of the 2027 to 2028 tax year in April 2027. Relief already claimed counts towards the limit, and the 18% rate does not change. For tax, the date of an unconditional contract normally counts as the date of disposal rather than completion, and specific rules will apply to contracts signed before the change that complete after it. Where this page quotes a different limit, rate or date, this note takes priority. Take advice on your own position. What the change means for owners.
The 2035 gas boiler phase-out is reshaping the sector.
The UK government's commitment to phase out new gas boiler installations by 2035 is creating a structural shift in the HVAC industry. Businesses with heat pump installation capability, MCS accreditation, and engineers trained in renewable technologies are being valued at a premium.
For buyers, acquiring a business that is already positioned for the transition is faster and cheaper than building the capability from scratch. Engineer retraining costs of £3,000 to £5,000 per person, plus the time to achieve MCS accreditation, mean that businesses already on this journey are worth significantly more than those still reliant on gas boiler work alone.
This is not a prediction. It is a structural change that is already driving acquisitions. Buyers are actively seeking HVAC businesses that have begun the transition, and the premium they are willing to pay reflects the cost and time they save by acquiring rather than building.
Private equity is buying HVAC businesses at scale.
Over 200 HVAC acquisitions were completed in 2024 alone. Private equity firms, which buy companies to grow and sell on, are building "buy and build" platforms in the heating and cooling sector: they buy one sizeable business, then add regional businesses to it to create national operations with shared back-office, procurement, and training infrastructure.
They target businesses with:
- Recurring maintenance contracts providing predictable revenue
- Qualified Gas Safe and F-Gas engineering teams
- Geographic density within their target regions
- Professional management and systems in place
- Heat pump capability and MCS accreditation
Active companies in plumbing, heating and air-conditioning installation: About 49,800
Source: Companies House, October 2026. Sole traders and partnerships are not counted.
Gas Boiler Phase-Out: 2035 deadline
The UK government's target to phase out new gas boiler installations is driving structural change in HVAC valuations.
PE Consolidation: Over 200 HVAC acquisitions in 2024
Private equity platforms are systematically acquiring regional HVAC businesses to build national portfolios.
Tax Relief on a Sale (BADR): 14% to 18% from April 2026
The tax rate under Business Asset Disposal Relief went up from 14% to 18% in Apr 2026. On a £1m qualifying gain, that is an additional £40,000 in tax.
For independent owners, this means more buyers competing for your business, which drives valuations up. The window of peak consolidation activity does not last forever, and businesses that are well-positioned now are attracting the strongest interest.
What buyers actually pay: a worked example.
To illustrate how valuations work in practice, here is a representative example based on typical market transactions.
Example HVAC Business Profile
What pushes towards 5x: Heat pump capability and MCS accreditation demonstrate future-readiness. Low owner dependency means the business runs without the seller. Strong recurring contract base provides predictable revenue for the buyer.
What pushes towards 4x: Geographic spread across a wide area reduces route density. Heavy reliance on a single large client introduces concentration risk. Limited heat pump capability may require buyer investment in retraining.
Every business is different. This example illustrates the methodology, not a promise. Your valuation depends on your specific circumstances.
The BADR rise: why timing still matters.
Business Asset Disposal Relief (BADR) provides a reduced rate of Capital Gains Tax, the tax on the gain you make when you sell, on qualifying business disposals up to £1 million, falling to £500,000 from April 2027. The rate rose in stages and has been 18% since Apr 2026.
| Before Oct 2024 | Oct 2024 to Apr 2025 | Apr 2025 to Apr 2026 | From Apr 2026 | |
|---|---|---|---|---|
| BADR Rate | 10% | 10% | 14% | 18% |
| Tax on £500K gain | £50,000 | £50,000 | £70,000 | £90,000 |
| Tax on £1M gain | £100,000 | £100,000 | £140,000 | £180,000 |
These are simplified illustrations. Capital Gains Tax calculations depend on your personal circumstances. Always take advice from your accountant.
The rate change is legislation, not speculation. For a £500,000 gain, the difference between 14% and 18% is £20,000. For a £1 million gain, it is £40,000. If you are already considering a sale, starting the process now gives you time to prepare properly and to plan the timing with your accountant.
Find out what your HVAC business is worth.
Start with a free first conversation with Simon or Emily, in confidence. The paid Business Value & Exit Snapshot is a written, indicative view of value, and what to fix first.
The heat pump transition is reshaping the sector.
UK heat pump sales grew 63% in 2024, reaching a record 98,345 units. Add-on acquisitions in HVAC services by private equity firms (investment firms that buy companies to grow and sell on) rose 88% year-on-year in 2024 to 2025, driven by interest rate reductions and strong consolidation appetite. Buyers are actively acquiring certified engineering teams rather than building them from scratch. Gas Safe and OFTEC-registered engineers are in critically short supply, making established HVAC businesses with accredited staff a direct acquisition target.
Sources: Cooling Post (MCS/BEIS data), HVAC Services M&A Update 2025. Industry reference ranges, not UK-verified transaction data.
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