Navigating Private Equity: Lessons from the HVAC Sector

In today's episode we have Steve Carroll, CEO and Co-Founder of Kelso Industries, join us to share his journey from a small-town construction background to leading a 25-acquisition HVAC roll-up. We dive into his Walmart days scaling EBITDA from $15M to $250M, his views on where PE firms get it wrong, and how Kelso’s long-term partnership model is flipping the script on traditional roll-ups.

[00:00] Steve Carroll joins to discuss Kelso Industries' growth from 1st to 25th acquisition

 [00:27] Background: Walmart experience and scaling from $15M to $250M EBITDA

 [00:54] Early years: rural Oregon, construction, MBA, and entrepreneurial itch

 [01:50] Lessons from Walmart and foundation of Kelso

 [02:21] Mistake PE firms make: copying each other, bidding up same assets

 [03:05] Advice: PE should pursue untapped markets and take first-mover risks

 [04:21] Kelso's differentiator: deep focus on one long-term strategy

 [05:49] “All in” mindset and scaling Kelso as one big platform

 [06:18] First acquisition story: moving to AZ, transition challenges

 [07:46] Struggles, COVID, and lessons learned from initial takeover

 [08:43] Pivot to partnership model after burnout and realization

 [09:42] Defining partnership: skin in the game, shared long-term vision

 [11:08] Case study: Pancho in Idaho becomes the blueprint for future deals

 [13:03] Criteria for Kelso partnerships and alignment with long-term goals

 [14:00] Integration learnings: then vs. now at deal #25

 [14:50] Kelso now offers finance, legal, HR, recruiting, and systems support

 [17:44] Operational push: MEP+ and one-call solution model

 [18:43] Scale enabling better integration and centralized resources

 [19:12] Raw Selection salary reports plug

 [20:11] Top 3 learnings: partnership, finance investment, data center boom

 [23:23] Walmart story: monetizing eyeballs, retail media, Sam’s Club success

 [26:17] Building a $250M EBITDA business unit through creative thinking

 [27:42] Why HVAC: passion, mission-critical systems, smartest people on site

 [28:49] Key influence: Brad Jacobs and “How to Make a Few Billion Dollars”

Connect with Steve Carroll on LinkedIn. Thanks for tuning in.

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Got feedback or questions? Email Alex at alex.rawlings@raw-selection.com. Until next time—keep smashing it!