• Carrier acquired Viessmann. 

• Johnson Controls sold its residential HVAC business to Bosch. 

• Emerson sold Copeland to private equity group Blackstone. 

• Rheem bought Nortek Global HVAC. 

• Research Products (parent company of AprilAire) purchased EWC Controls. 

• Laars/Bradford White bought Electro Industries. 

• Honeywell bought Carrier’s Global Access Solutions. 

• And Daikin and Copeland just signed a new joint venture. 

Experts agree that while there are a lot of factors driving this trend, it’s a good thing for HVAC and a sign of its strength. 

“It’s great to see the activity; you can just feel the energy and the buzz in this industry right now,” said Kate Wessels, ACCA’s vice president of marketing, communications, and partnerships. “The regulatory landscape in particular has put pressure on manufacturers to respond and adapt in big ways, especially following the pandemic years of supply chain disruption. Innovation and technological advancements have also been big factors when considering the state of market competition.” 

Here are four reasons why this is happening, and what HVAC contractors can expect as this part of the business cycle plays out. 

1/ Manufacturers are purchasing innovation. 

“First and foremost, the cost of innovation is extremely high and extremely, extremely risky, in terms of it actually returning a long-term profit,” said Zachary Perge, vice president of distribution strategies at HARDI. “It's perceived as that is a much quicker and more inexpensive path than trying to organically innovate and grow within that business.” 

In choosing a company to acquire, it’s not always about the business itself — sometimes it’s about purchasing their engineering ability. In Perge’s previous experience as an M&A consultant, he worked on an acquisition for a semiconductor company. Company A wasn’t necessarily enthralled with Company B, and it wasn’t about their books or their outlook; it was because company B had a really strong R&D and engineering department. 

“It was, ‘We want their engineers and our engineers working together,’” he said. “So kind of that human capital aspect to it, I think, is certainly important in our industry, because at the end of the day, we are still a technology industry in a lot of ways.” 

Granted, there’s a bit of a pendulum effect with this. Sometimes in-house innovation is seen as a better option, and sometimes the business community prefers purchasing a known quantity. Right now, Perge said, “We're certainly seeing that pendulum swinging towards more established ‘sure things’ and cutting down that innovation pipeline.” 

Jeff Stagnoli, business coach at Nexstar Network, has been in the industry for 33 years, specializing in M&A, and he’s seen this before — for example, when Daikin bought Goodman in the 2000s. 

“They did a really good job of taking brands that were considered more of an economy brand, and they did do some improvements, mostly in the quality control they put in place, and then marketing and product support and benefits to the contractor as well as the homeowner through warranties, things like that. … And they rebranded the equipment, and it gave them an opportunity to break into an industry that they wanted to be part of.” 

Bosch buying JCI’s residential HVAC business seems like one such example, he said. 

“Bosch has been pushing really hard to get into the residential unitary market, and through this acquisition, they're instantly going to have a really strong foothold in the United States,” he said. “And I think what they'll do is exactly what we've seen with some of these other brands. They're probably going to do a little bit of improvement, take some of their marketing expertise, and integrate it. We’ll see whether they keep the York name or not … [they may see] a higher adoption rate through a different name, because Bosch, in my opinion, does seem to represent kind of a higher end-brand.” 

“My eye is on Bosch in 2025 and 2026,” added Sam Snyder, research analyst at Northcoast Research. “They want market share. Will they be able to take it and how is a critical question that I’m asking in the near term.” 

2/ It could be the threat of tariffs. 

If innovation capabilities are one reason to purchase, manufacturing capabilities certainly are another — in particular, U.S. manufacturing. Trump has promised tariffs on imports from China, Mexico, and Canada, and while economists have no consensus about whether this will actually happen, some companies aren’t waiting to figure out. 

“The onset of these tariffs on Chinese steel is a large, large part of this,” Perge said. “It could really change the face of M&A.” 

Onshoring was already a trend, as COVID-19’s supply chain issues showed the constraints of a global sourcing platform. 

“If you're able to shorten that window by having things more on a domestic front, I think that's deemed as really, really attractive to a lot of OEMs and suppliers in the HVAC industry,” Perge said. “So I do think that you are in an advantageous position if you are able to manufacture in America, regardless of what these outcomes are.” 

3/ There could be a move toward specialization. 

Stagnoli, at Nexstar, said he’s seeing a trend where brands are starting to specialize more — for example, focusing in on either commercial or residential, but not necessarily trying to be the best at both. He chalks that up to the economic forecasts he’s been seeing lately.  

“What we've been told by our economists is that 2025, the first half, is going to be a little bit like 2024. It wasn't bad, but it wasn't a big breakout year for our industry,” he explained. “The first half of ’25, we believe, is going to be very similar to 24 and then … we think the second half of ‘25 is going to be really strong, and then ’26, ’27, ‘28 are all going to be some great growth years. 

“I can only imagine some of these global organizations are aligned with that, and they're just kind of doubling down on their core business [in] a little bit of preparedness for the next couple years,” he continued. “[Companies] are streamlining. They’re trying to focus on what they're best at. They're focusing on their core, so that when things do break loose, they're going to be very, very good at some specific areas, and as a result, they're going to be very profitable in specific areas, instead of trying to be a solution to all aspects of the industry — and kind of capture a certain chunk of the industry because of being specialists.” 

That would explain why JCI sold off York residential, he said. 

“It's so that they can focus on their core, which is that commercial offering.” 

4/ Everybody’s getting on board the electrification bandwagon. 

This year in the U.S., heat pumps outsold gas furnaces for the third straight year in a row. There’s no question: The shift to electric is well underway, and manufacturers are making moves to get a foothold. 

“I think a lot of it is, they're trying to maximize on a changing market,” Stagnoli said. Carrier’s acquisition of Veissmann, a heat pump manufacturer in Europe, and Bosch’s purchase of JCI’s residential segment to get into the U.S. market, “specifically the heat pump offerings,” he said, are a prime example. 

“I think a lot of it is to chase that heat pump market, and I do wonder what the next big improvement is going to be there, because I suspect if we're going to really, really push for strong electrification of the whole grid, to where we're getting away from fossil fuels, I’ve got to imagine that we're going to see some new technology, or advanced technology, being introduced,” he said. “And I think that's why you're seeing some of these guys doubling down. They know that they need to gain a little more market share in order to have the R&D dollars in order to go for that next big improvement.” 

Snyder concurred, citing Carrier/Veissmann as well as Bosch/York. 

“At the end of the day, every company wants to grow market share — if you aren’t playing offense, it’s hard to win in residential and light commercial HVAC.” 

Will it continue? 

Experts at HARDI and Nexstar both say yes. 

“Right now, private equity is sitting on the most dry power that they’ve had since it's been tracked,” Perge said. “The top 25 PE firms are all more cash-rich than they've ever had before” — $555 billion of uncommitted capital, to be exact. Interest rates aren’t as low as last time M&A went on an HVAC shopping spree, but “when you're on that much dry powder, you don't necessarily need to tap into that.” 

Meanwhile, while it remains to be seen how much deregulation the Trump administration will bring, “there will be certainly not more regulation,” Perge said. “And when you start to see potential for extremely large supplier M&A activity, I don't see the government necessarily curtailing that.” 

As far as how this plays out for HVAC contractors, Stagnoli sees “nothing but upside.” 

“You're going to see brand improvements … because from everything I've seen in the past, nobody makes an investment without the intention of making money on it, right?” 

Those improvements might come with price increases, Snyder said. 

“Anytime a supplier consolidates, you can expect that, all else equal, its ability to raise prices and negotiate improves (for the supplier),” he said. 

Stagnoli’s only caution was to keep informed and avoid getting swept up in the excitement and aligning completely with one brand right out of the gate. 

“There's always a learning curve that goes along with it, and that learning curve comes with a cost,” he said. “I don't want people going, ‘Oh, we'll sell this brand-of-the-week.’ I don't want them doing that, because there's some soft costs involved that we often don't consider.”