✕

In a climate in which deals involving U.S. HVAC firms are being made at the rate of more than three a week, Leap Partners has, well, leaped quickly to the front of that trend.

In less than two years, the Nashville-based company has picked up 15 different home-services firms as it built a portfolio of HVAC, plumbing, and electrical contractors across seven states, all but one in the Southeast.

Eleven of the Leap Partners brands offer HVAC service.

Leap gives its acquisitions resources and handles back-office functions like payroll, taxes, and recruiting, while allowing the former owners wide latitude to keep their brands and run their shops as they see fit, said CEO John Cerasuolo.

For his work in leading the Leap Partners team, The ACHR NEWS has named Cerasuolo one of the NEWSMakers of the Year for 2023.

Cerasuolo credits a good core team, leadership lessons he learned as an officer in the U.S. Navy, and — most importantly — the high caliber of management at the brands Leap has acquired for the company’s success.

“We understand what it takes to build a back-office support team for these businesses. We understand what it takes to find good companies and complete acquisitions,” Cerasuolo said during a recent interview. “But our model depends on us finding exceptional leaders that own these businesses, that will come with us, stay with us, and help us to build the organization.”

TEAMMATES: Leap Partners CEO John Cerasuolo, right, meets with Paul Snowden, whose company, Conditioned Air Solutions of Huntsville, Alabama, was acquired by Leap. Snowden stayed on at Conditioned Air and continues to run it as a vice president. (Courtesy of Leap Partners)

Cerasuolo was born in New York City, grew up on Long Island, and is a graduate of the U.S. Naval Academy. He was on active duty for five years, serving much of that time on the U.S.S. Virginia, where he tested, operated, and maintained the vessel’s twin nuclear reactors, and also trained personnel.

The role challenged him, at a young age, to develop leadership skills, Cerasuolo said.

“I learned the importance of surrounding yourself with talent that are pursuing aggressively a common objective, and the importance of developing among your team the enthusiasm to achieve that common objective,” he said.

Cerasuolo, who majored in political science and economics at the Naval Academy and later earned a master’s in business administration, had a career before Leap that brought him to various industries, from tire manufacturing to fiber optics to telecommunications to electronic security systems. In two of his more recent roles, he helped build the companies through acquisitions, and after ADS Security, a Nashville company of which he had been president for about 12 years, was sold to a private equity firm, Cerasuolo and several colleagues who had built ADS with him founded Leap.

“We really had a good business model that we knew could be successful in any home-service industry,” Cerasuolo said. “And we decided we were going to find another industry to work together in.” They researched a variety of home services, including roofing, pest control, and window replacement, before settling on HVAC, plumbing, and electrical.

“We knew if we could find the right companies and the right quality of owners to join us, that we could build something really special in the Southeast in the HVAC space,” he said.

Leap made its first acquisition in March of 2022.

Cerasuolo and his core team are interested in HVAC companies focused on residential service and replacement work rather than commercial or industrial jobs or new home construction.

“When someone’s air-conditioning system breaks, they’re going to get it fixed,” Cerasuolo said. “It’s not really a discretionary spend, as opposed to working with builders doing big new construction projects that can, you know, turn off, on, sometimes on a dime, depending on economic conditions.”

Leap is banking, for now, on the Southeast; only one of its shops is outside that region (in Missouri). The Southeast’s weather, demographics, and thriving cities all play a role, Cerasuolo said.

“There’re cities in the Southeast that that continue to grow, and we expect will continue to grow even in spite of ... economic considerations that might be going on in the broader economy,” he said. “So we like the demographics, and we like having somewhat of a tighter geography, that we can build a culture.”

The company avoids a hard-sell approach to acquisitions, Cerasuolo, but has a database of thousands of companies and an active outreach program. The goal, he said, is to first build relationships.

“We want to make friends with owners of companies that we think are going to be a good fit with us, even if they’re not interested in selling today and it’s not the right time,” he said. “Because we want to convince them that when the time is right, we’re the right company to partner with.”

The character of a prospective acquisition’s top leader, Cerasuolo said, is an important factor.

With one exception, the former owners of the companies acquired have joined Leap to run their local brands. Leap’s resources and positive culture provide the incentive, Cerasuolo said, and staying on is not a contractual obligation.

“We choose to build an organization and create an environment and a culture where they’ll want to stay,” he said. (In the case of the exception, Leap already had a brand in the same market — the deal wouldn’t have been done otherwise, Cerasuolo said — and the owner was ready to retire.)

Leap buys 100% of all its acquisitions; for their companies, the former owners get cash and shares in Leap, and are relieved of back-office tasks.

“Their strength is leading teams, being out in the field, helping their employees, and serving their customers,” Cerasuolo said. “And our goal is to offload the back-office distractions, in many cases, from them, so that they can focus on the things that they do really well.”

Ceresuolo sees the higher interest rates of the last 18 months or so as having slowed HVAC acquisitions, particularly among buyers that are taking on debt. “Debt is much more expensive today than it was,” he said.

But Leap is well capitalized with low debt, he said, and hasn’t felt much interest-rate pain.

“We’re not relying on debt to finance our deals,” he said.

Cerasuolo is bullish on the state of the HVAC industry, despite some economic turmoil, and confident about Leap’s position in it.

“This is an industry that’s largely driven by non-discretionary purchases, which insulates it to some degree from the challenges that a lot of companies and industries are going to face if the economy deteriorates,” he said. “So I think I think this is a great industry to be in. We’re very enthusiastic about the future. And we were confident we picked the right industry to build Leap Partners.”