How to Spot a PE-Owned Home Service Business

Investor groups have spent the last decade buying local home service companies: HVAC, plumbing, electrical, roofing, pest control. The companies keep their old name on the truck. The phone number is the same. The website still says "family-owned since 1972."

The family that founded that company is often gone. The company now answers to an office somewhere else, and nothing on the truck says so.

Here is how to tell, before you let them in.

Five signs the family business isn't a family business

1. "Family-owned" with no family named. A real family business is proud of the family: the founder's name, the year, often three generations of photos. A company that was sold and kept its branding tends to keep "family-owned" in the copy and quietly drop the names. Read the About page and check who is actually mentioned.
2. The name on the paperwork is not the name on the truck. Look at the invoice, the permit, the warranty and the license. "Smith Heating, a Comfort Group company," or an owner of record you have never heard of, means the business changed hands, whatever the sign says.
3. The fine print mentions a parent. Privacy policies and terms pages are written by lawyers, not marketers, and they say "our parent company," "our affiliates" or "our family of brands" long before the home page admits anything. Open the privacy policy and search for "parent."
4. The careers page belongs to someone else. Click "Careers." If it sends you to a group's job board, or the listings say "join the X family of companies," you have found the owner.
5. Sister brands in other towns. A footer that lists other companies in other cities, or a "part of" line, is a group telling you who it is. A one-location family business has no sister brands.

The information is usually public. It is just not on the truck.

Three checks you can do in ten minutes

If any of the signs above raise a flag, here's how to verify before you sign:

1. Check Parity first. Type the company's name into the Ownership Record. If it is there, the owner is on its page with the source next to it.
2. Search the company name with "acquired," "joins" or "partners with." Investor groups announce their purchases: a press release, a line in a trade magazine, a page on the group's own site. If a search returns "[Company] joins [Group]," you have your answer.
3. Check the license and the state filing. Every state has a public business search, and most trades have a license lookup. Look at the legal name and the address on file. When a company has been sold, the legal name usually changes before the sign does.

What about franchises?

A franchise is a different case. The brand on the truck belongs to a franchisor, and several of the big ones are investor-owned. The location near you usually belongs to a local owner who runs it. Both things can be true at once.

Ask the person on the phone who owns the location. A franchise owner will tell you their name. The brands, and who owns each of them, are listed with sources on the Ownership Record.

What this doesn't mean

A company being PE-owned does not automatically mean the work will be bad. There are good technicians at PE-owned companies. There are bad technicians at independent ones.

What it means is that you should know who you are doing business with. The owner decides the prices, the warranty and who answers the phone when something goes wrong, and you deserve to know whether that owner is the name on the truck or a group you have never heard of.

You deserve to know which one is on your driveway.

Related: 957 home-service companies were bought by individuals last year. Nobody was counting. The other kind of buyer, counted from the SBA's public loan file.

Related: Can you find out who owns an LLC? Why the ownership of a small company can be genuinely impossible to trace, and what that has to do with the laws that just failed.