Morgan Stanley Sells HVAC Company to Goldman Sachs Division

Morgan Stanley's (NYSE:MS) private equity division has agreed to sell Sila Services, a heating, ventilation, and air conditioning (HVAC) company, to Goldman Sachs Alternatives' private equity unit. The agreement, announced today, marks a significant move in the HVAC sector, which has drawn intense interest from private equity firms.

Sila Services, a Pennsylvania-based provider of residential HVAC, plumbing, and electrical services, had been under Morgan Stanley's ownership since 2021. The company has capitalized on rising demand for environmentally friendly HVAC services spurred by low borrowing costs and stricter environmental regulations.

Although the financial details of the sale have not been disclosed, reports from September suggested that Sila could be valued at approximately $1.5 billion, including debt. The management team at Sila will retain a minority stake and continue to manage the company following the acquisition.

The HVAC sector has proven to be an attractive area for private equity investments due to its stable cash flow and the essential nature of the services offered. According to a report by M&A advisor Capstone Partners, the deal-making rate in the sector increased by 6.9% year-over-year toward the end of last month.

In this transaction, Sila's lead advisor was William Blair, while Robert W. Baird & Co. provided advisory support. Morgan Stanley's investment in Sila is part of a broader industry portfolio that includes companies like Fairway Services, an outdoor home maintenance provider, and Allstar Services, a residential roofing company.

The sale of Sila to Goldman Sachs Alternatives' private equity arm reflects the ongoing consolidation and interest in the HVAC sector, highlighting the industry's resilience and growth potential.