5.3.8Segment

Mechanical, Electrical & Plumbing (MEP)

Mechanical, electrical, plumbing, and fire protection contractors performing building systems installation and service.

5
Verticals

Overview

Mechanical, Electrical & Plumbing (MEP) covers the specialty trade contractors that install and service building systems, including electrical, plumbing, HVAC, and other mechanical equipment. At ~$589B across nearly 200,000 establishments, it is the largest specialty-trade segment and the single most active corner of construction for private-equity roll-ups.

Demand is driven by both new construction and the recurring service, maintenance, and retrofit of existing building systems, with the recurring side (service contracts, repairs, replacements) especially attractive. Electrification, data centers, and energy-efficiency retrofits are structural tailwinds. It is highly fragmented and consolidating fast.

Market snapshot

Market size
~$589B
Growth
~7.5%CAGR (2017–22, nominal)
Companies
~193,336 firms
Firms by employee count

89.6% of firms have fewer than 20 employees: 173,222 micro-businesses, below most mandates.

The investable universe20,114 firms with 20+ employees
20–99
17,19886%
100–499
2,39312%
500+
5233%

The deepest acquisition pool in construction (nearly 200,000 firms, nine in ten under twenty people) and the segment where roll-ups have concentrated, because service and retrofit work recurs against an installed base while new-build does not. Growth here outpaced general contracting, which is the aftermarket showing through.

NAICS 238210, 238220, 238290. U.S. Census Bureau, 2022 Statistics of U.S. Businesses; U.S. Census Bureau, 2022 Economic Census.

Business model & economics

Revenue model

Installation contracts plus recurring service and replacement

Key economics

Revenue per firm
$3,047,945
Revenue per employee
$258,417
Employees per firm
11.7
Recurring revenue
Moderate

recurring service, maintenance, and retrofit

EBITDA margin
Service work higher-margin than install
Capex intensity
Moderate

Characteristics

  • Balanced cost base: payroll is 27% of revenue, leaving room to scale margin without cutting staff
  • Deep strategic-buyer pool: 523 firms exceed 500 employees, so a scaled asset has trade buyers
  • Largest specialty trade; the hottest PE roll-up corner.
  • Recurring service and replacement especially attractive.
  • Electrification and data centers structural tailwinds.

NAICS 238210, 238220, 238290. U.S. Census Bureau, 2022 Statistics of U.S. Businesses; U.S. Census Bureau, 2022 Economic Census.

M&A deal context

Deal activityHigh

Who’s acquiring

  • PE-backed MEP & HVAC platforms
  • National service consolidators
  • Facilities & mechanical strategics

What’s driving deals

  • Aggressive roll-up of fragmented trades.
  • Recurring-service revenue and replacement cycles.
  • Electrification and efficiency-retrofit demand.

Verticals in this segment

Find Mechanical, Electrical & Plumbing (MEP) acquisition targets

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