Why 25% maintenance plan penetration is table stakes now

Five years ago, a 15% maintenance plan penetration on your residential customer base was considered strong. Today, that's a starting line.

The reason is simple math. Buyers assign value to a maintenance agreement holder at roughly 1.5-2x annual plan revenue. A business with 2,500 plans at $249/year has roughly $900k-$1.2M of stickable enterprise value just in the plan book, separate from the EBITDA multiple on the underlying operations.

I spoke with an electrical operator in Tampa last week sitting at 42% penetration. His EBITDA is "only" $1.8M, but his buyers are bidding like it's $2.5M because the plan book takes so much risk off the underwriting. He's likely to clear 11x on the operating EBITDA when he transacts next quarter.

The uncomfortable truth: if you're still below 15% plan penetration, you're structurally undervalued. The work to move from 15% to 25% takes 9-12 months of focused effort — plan design, CSR scripting, tech training, follow-up cadence. It's not glamorous. It's the single most valuable project you can run.

Deal Flow

Legacy Service Partners acquires two Wisconsin plumbers. Both in Milwaukee metro, both in the $1.5-2M EBITDA range, both service-heavy. Multiples not disclosed but consistent with LSP's 8-9x range for this profile.

Wrench Group adds in Atlanta. Two HVAC operators folded into the Atlanta platform. Market intelligence suggests aggressive pursuit of any $1M+ EBITDA operator in Georgia through 2026.

PE-backed Apex Energy Systems (no relation to Apex Service Partners) raises $85M for a new platform focused on commercial mechanical. Worth watching — commercial HVAC M&A is ~18 months behind residential in the consolidation curve.

Operator Tactic: The "who runs it if you don't show up" question

Every platform PE buyer asks some version of this question in the first meeting. The honest answer determines whether your multiple has a 7 in front of it or a 10.

The test: if you stepped back for 60 days — no phone, no email, no emergency calls — what breaks? Revenue? Key customer relationships? Vendor negotiations? Hiring? Your answer is the buyer's risk model.

The fix is not "hire a GM." The fix is "hire or promote a #2, then systematically remove yourself from the operational work over 12-18 months."

One tactical move that works: starting Monday, every decision you'd make today, you ask your #2 to make first. You approve or reject. After 90 days, start rejecting fewer decisions. After 6 months, you shouldn't be consulted on most operational choices. This is how you build a buyer-ready business while you're still building the business.

The Toolbox: ServiceTitan Titan Intelligence

ServiceTitan launched their AI module last quarter targeting three use cases: dispatch optimization, membership upsell prompts, and pricing nudges. Early operator feedback:

Working well: The dispatch module reduces drive time meaningfully (10-15% reported). This alone pays for the upgrade.

Mixed: Upsell prompts work but CSRs need training to actually use them. Without training, adoption is under 20%.

Not yet ready: The pricing nudge logic needs another 2-3 quarters to be useful for operators with custom flat-rate books.

If you're an ST customer, the dispatch feature alone is probably worth adding. Skip the rest until reports improve.

Ticker

• Jobber reportedly closes its series E at $100M raised; doubling down on $1-5M operators
• Angi Leads quality complaints continue; most $5M+ operators have left the platform
• SBA 7(a) interest rates settling around 10.5-11%, which keeps search fund buyers active but disciplined
• Mike Andes launched a new paid community for $1M-$5M home services operators; early reviews strong

Question for you: what's the single most valuable thing I could write about in the next issue? Hit reply and tell me.

— AJ