Champions Group Holdings, an air conditioning and heating service provider that declares it has “the world’s friendliest technicians,” is being acquired by Blackstone Inc., the companies announced Feb. 17.
Terms of the transaction were not disclosed. However, Bloomberg reported that the deal is valued at about $2.5 billion, citing unidentified people familiar with the matter.
“We believe Blackstone’s resources and expertise will help us accelerate growth, strengthen our market leadership, and continue raising the bar for the home services industry,” Champions Chief Executive Frank DiMarco said in a statement.
The deal is another capstone in the remarkable rise of Champions, which began in 2000 under Leland Smith, a self-professed failed plumber. Today, Champions employs more than 2,400 people nationwide and its revenue may well surpass $1 billion.
The seller, Odyssey Investment Partners, and the Champions leadership team will retain a significant minority stake in the company, according to the statement.
Blackstone is the world’s largest alternative asset manager, with $1.3 trillion in assets under management, including global investment strategies across real estate, private equity and hedge funds, among other fields (NYSE: BX).
“This partnership positions Champions Group to set a new standard for the industry and create long-term value for customers, employees, and the communities it serves,” Michael Staub, senior managing director, and Maury Bardovi, managing director at Blackstone, said in the statement.
“By bringing together best-in-class essential services under one umbrella, we have an opportunity to redefine what homeowners expect from a residential services provider—exceptional quality, reliability, and scale, all delivered locally.
A Great Roll-Up
Champions roll-up strategy has made it the largest residential heating and air conditioning service provider in the Western U.S.
Champions serves various markets via more than 20 local trade names, including Moore Home Services, Bell Brothers, ASI and ProSkill Services. Recent purchases include Lex Air Conditioning, Heating, Plumbing & Electrical in Texas, Bee’s Plumbing and Heating in Seattle and McAfee Heating and Air Conditioning of Dayton, Ohio.
The sale, the company noted on LinkedIn, won’t alter Champions’ ethos—rooted in founder Smith’s vision.
“We remain a premier home services company with a people-first approach, focused on doing the right thing for our customers, employees, and communities,” the company said.
A Kentucky Plumber
Smith comes from a family of plumbers in Kentucky, where he grew up and attended university. He arrived in Southern California at age 25 in the 1970s when his brother offered him a job. At that time, he was earning $10,800 a year as an accountant when he asked his uncle how much he would make as a plumber.
“My uncle said if you’re dumb, stupid and ignorant, you’d make at least $50,000 a year. I thought I’d make at least $25,000,” he quipped. “I was a sweet ol’ country boy from Kentucky who turned into a plumber.”
When Smith started his own plumbing company in 1979, he learned he wasn’t good at plumbing, saying his work caused two minor house fires.
“So I came into the office,” Smith told the Business Journal in a 2021 interview. “I tell people I’m the least technical person in the building. I know the business side well because I’m an accountant.”
He built that initial plumbing company to $5 million in annual sales before selling it in 1997 to American Residential Services, where he worked for a couple of years.
After his non-compete clause expired in 2000, he decided to start what was then called Service Champions. It changed to Champions Group Holdings in 2023, when the company was still based in Brea.
This time, he focused on heating and air conditioning systems, where training can be done within a few months, as opposed to plumbing, which requires a couple of years to learn the trade. He began with just one salesman and two installers.
His edge was providing quality services in an industry known for poor customer treatment.
“One of our core values is being on time. We’re really strict about it. If I’m a customer who has an 8-to-10 appointment window and you show up at 10, I’m ticked. I want you there at 8 o’clock.”
He hired technicians with pleasant personalities who smile, give eye contact and can make people comfortable.
“We do everything we can to get the best personalities. We can teach them the technical side, but you cannot teach personality,” he said. “Our techs are the friendliest guys out there. We’ve even trademarked ‘the World’s Friendliest Technicians.’”
He decided to attract the best employees by offering higher salaries, with the condition that technicians not look scruffy in old clothes and unshaven beards. The company even teaches technicians how to park their trucks.
The company has a “happy money promise,” under which customers don’t have to pay if they’re unhappy with the service. His technicians will do “good deeds for free,” such as painting the side of a house or installing an Xbox.
“We want to wow the customer. We’re always trying to do a little bit more than heating and air conditioning.”
Another edge was to start a subscription service, where customers pay $14 to $24 a month for a tune-up twice a year for their systems.
If their systems break on a hot or cold day, their systems will be fixed that very day. Nowadays, Champions has 150,000 active members.
DiMarco, who has 30 years of operational experience in the industry, was previously Champion’s chief operating officer before taking over as CEO in 2022 when Smith remained as its chairman.
The PE Angle
Around 2019, Smith noticed “things started to happen” when his company reached $45 million in annual sales with an adjusted profit of around $12 million.
Then based in Brea, it was approached by a private equity firm, Dallas-based CenterOak Partners, which bought a majority stake. By 2020, Champions generated $280 million in sales with $60 million in EBITDA.
That year, it was purchased by Odyssey Investment Partners for an undisclosed amount. Its goal was to reach $1 billion in annual sales by 2026.
“Over the past five years, we have had the honor of collaborating with Frank DiMarco and his outstanding team to successfully build Champions Group into a larger and more diverse home services company through a range of value generating organic growth initiatives and several strategic acquisitions,” Brian Kwait, CEO, and Dennis Moore, managing principal of Odyssey, said in the statement.
“We are excited to partner with Blackstone in the next chapter of growth for Champions Group.”
The transaction is expected to close by midyear.
Weil served as a legal advisor to Blackstone. William Blair is serving as lead financial advisor to Champions Group and Odyssey, with Piper Sandler and Baird as co-financial advisors. Latham & Watkins LLP is serving as legal counsel to Odyssey.
