The increased emphasis on maintaining good air quality, especially after the covid pandemic, presents attractive tailwinds for the HVAC sector, Ardian’s North America team said following its recent investment in the Tom Barrow Company.
Several factors make commercial HVAC attractive, Ardian’s New York-based managing directors Todd Welsch and Kevin Kruse told PE Hub. The management team and founding family will continue to own a meaningful minority share of the business.
Focusing on the Southeast region, Tom Barrow offers services in a range of commercial HVAC equipment across healthcare, life sciences, education, government, industrial and other commercial end markets.
The company offers a suite of HVAC products such as custom air handling units, packaged equipment, precision cooling equipment, air distribution, fans, sheet metal products and a variety of other specialty applied equipment and commercial components.
“The concerns about covid and other types of airborne diseases are actually driving increased spending on HVAC equipment,” Kruse said.
Several stakeholders, including the CDC and the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE), are setting guidelines for indoor air quality.
ASHRAE is finalizing its guidelines for HVAC-related measures to reduce the risk of transmission of covid, influenza and other viruses in homes, offices, schools and hospitals during periods of high risk.
Building owners, architects, builders and other stakeholders are seeking ways to promote energy efficiency in buildings, Kruse said. There “is a recognition that commercial HVAC plays a really important role in energy-efficient buildings.”
“We are very bullish on demand,” added Kruse, because of opportunities especially in large facilities such as EV battery plants, manufacturing facilities, data centers and other commercial buildings that draw hundreds of employees.
Tom Barrow also provides a critical link in connecting commercial HVAC manufacturers, local decision-makers, building architects, engineers, and mechanical contractors who are working on finding solutions to commercial buildings. “Tom Barrow connects all of those guys to help design the system and then to sell them the ultimate equipment,” Kruse said.
Even in times of extreme weather conditions that can compromise air quality, Tom Barrow’s units can help with indoor air quality, he noted.
The commercial HVAC market is likely going to benefit from the overall onshoring trends too, as manufacturers shift operations closer to home, Kruse said.
The air quality in these new plants will be an issue that Tom Barrow will likely benefit from, according to Kruse.
Turning to growth, Welsch said Tom Barrow has the potential to be scaled on both the organic and inorganic fronts by breaking into new geographies and adding new vendors.
Just like the residential HVAC business, the commercial side is highly fragmented too, especially in local markets where some founders are now seeking retirement. But when it comes to commercial HVAC, Kruse said many customers prefer to work with companies like Tom Barrow because those businesses are “much more stable, much more established and not really reliant on any single individual.”
Even though the construction market has taken a hit of late due to the broader economy, the commercial segment has remained resilient.
“We are not seeing pullback in terms of growth,” Welsch said, adding it could be that some projects like schools or hospitals are essential and financed through grants put in place long ago.
In the Southeast, Welsch said demand for commercial HVAC will likely remain strong because construction had lagged population growth and a lot of what we are seeing in terms of construction is the race to “keep up with the population growth from five to 10 years ago.”