HVAC and Electrical … Merging Manufacturers

The electrical and HVAC markets have many similarities, and some private equity companies may be noticing.


The commonality, other than manufacturers being able to identify operational synergies, could also extend to some distributors and create opportunities for distributors. This commonality is that more and more contractors are becoming dual trade … electrical and HVAC. The question then becomes, should distributors consider cross-industry acquisitions as part of their growth strategy?

Two manufacturers recently were acquired. The commonality – both serve the electrical and HVAC markets.


Morris Products’ Parent Acquired

DiversiTech, and HVAC manufacturer and the parent company of Morris Products, an electrical and lighting supplier, was sold by its private equity owner Permira to Partners Group.

According to a press release from Partners Group:

  • “DiversiTech provides over 6,000 customers with crucial parts & supplies
  • It is the second Partners Group acquisition in the broader HVAC sector this year
  • The transaction values DiversiTech at an enterprise value of USD 2.2 billion

Partners Group, a leading global private markets firm, has agreed, on behalf of its clients, to acquire DiversiTech (or “the Company”), the market-leading manufacturer and supplier of parts and accessories for heating, ventilation, and air conditioning (“HVAC”) equipment in the US, from funds advised by global private equity firm Permira. The investment values DiversiTech at an enterprise value of USD 2.2 billion. As part of the transaction, Permira and management will remain minority investors in the Company.

Founded in 1971 and headquartered near Atlanta, Georgia, DiversiTech is North America’s largest manufacturer of equipment pads and a leading manufacturer and supplier of components and related products for multiple industries. The Company serves over 6,000 customers through a broad product portfolio of c. 30,000 SKUs across six product families, including HVAC equipment mounting, electrical & replacement parts, condensate management and indoor air quality. DiversiTech has 1,250 employees across 20 locations in the US, Canada, and the UK.

Partners Group will draw on its extensive experience in the HVAC sector, including its August 2021 acquisition of Reedy Industries, a leading provider of commercial HVAC services in the US, to partner with the company’s management team, led by Chief Executive Officer Andy Bergdoll. Key value creation initiatives will include accelerating new product development, expanding through M&A, and bolstering internal manufacturing capabilities.

Andrew Oliver, Managing Director, Private Equity Goods & Products, Partners Group, says: “We tracked DiversiTech through our thematic investing approach and have conviction in its future growth prospects given the expanding installed base of HVAC equipment and the reoccurring demand for the Company’s essential parts and supplies. We are excited to partner with Andy and the DiversiTech team to lead the Company’s next phase of growth.”

Andy Bergdoll, Chief Executive Officer, DiversiTech, comments: “As a result of investments in our team, product lines and infrastructure over the last five years, DiversiTech has a solid foundation and leading position in the North American HVAC parts & accessories market. We look forward to building on our multi-decade history of market-leading organic growth and taking the company to the next level under Partners Group’s ownership.”

NSi Acquires Two Companies

Two days later, NSI Industries, which is owned by Odyssey Investment Partners, and is on a business building and diversification spree, acquired DuroDyne, an HVAC company

According to NSI’s press release:

“NSI Industries, LLC today announced the acquisition of Duro Dyne® Corp., a Bay Shore, N.Y. sheet metal manufacturer for the heating, ventilating, and air conditioning (HVAC) industry.

Terms of the acquisition were not disclosed. TM Capital served as advisor to Duro Dyne. The Duro Dyne acquisition adds the HVAC market to NSI’s distribution model.

“Duro Dyne has built a tremendous reputation with its customers over the years as not only providing first in class products, but also as the easiest company to work with in the market,” said G. R. Schrotenboer, CEO of NSI Industries. “By leading with these attributes, Duro Dyne naturally aligns itself with NSI and its approach to the marketplace. We welcome the Duro Dyne team to the NSI family and look forward to increasing Duro Dyne’s HVAC/R market share with the added strengths as part of the NSI platform.”

“We are extremely excited to partner with NSI,” said David B. Krupnick, president of Duro Dyne Corp. “Both companies’ synergistic value propositions in two of the most important sectors of the construction trade make this a perfect marriage. With both companies’ core values being innovation, customer service, and growth, we expect over the next decade to now be able to catapult Duro Dyne to a new level in the HVAC industry with NSI’s support. This will be accomplished by further supporting our tried and true values and expanding our scalable business model in the HVACR industry. This partnership will make Duro Dyne an even greater name in sheet metal accessories.”

“It is with great enthusiasm that the Duro Dyne team welcomes this partnership with NSI Industries,” added Patrick Rossetto, president of Duro Dyne National. “Duro Dyne’s values and business strategy is clearly aligned with that of NSI and that position will have a positive impact for our customers and employees alike. By joining forces, our strength and growth will be unparalleled in the HVAC and electrical supplies industries. We look forward to continued opportunities to cultivate great success in the near and long term future.”

This followed NSI ‘s acquisition earlier in November to expand its reach into the datacom market with the acquisition of TechLogix Networx to expand into the fiber optic technology space and complement its Platinum Tools offering.”

A few observations:

  • There are many commonalities in serving the electrical and HVAC markets. Could we see more companies, especially distributors, diversifying? Other manufacturers?
  • Both companies are owned by private equity firms, and large ones at that. Both are obviously committed to growth, and hence most probably more acquisitions are on the horizon for each company. Both have the resources to support larger appetites. A model for some other PE firms interested in these markets or will PE firms be more singular in their market approach and prefer standalone companies?
  • For strategic, publicly-held companies, are their mind-sets so focused on electrical to inhibit non-electrical diversification? The challenge for some could be that they are “comfortable” with their P/E (price earnings) ratio and may be hesitant to take risks. Privately-held companies may face the same internally-focused restrictions.

The is currently lots of companies, and lots of “money”, searching for deals. Thinking outside the box could pay big dividends.



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